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January inflation in Argentina, 4%, questioning government 2021 targets

Friday, February 12th 2021 - 09:49 UTC
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The items with most impact were telecommunications with a 15% increase, followed by hotels and restaurants 5,4% plus Food and Beverage, 4,8%, and Transport and fuel prices, 4,6% The items with most impact were telecommunications with a 15% increase, followed by hotels and restaurants 5,4% plus Food and Beverage, 4,8%, and Transport and fuel prices, 4,6%

Argentina's Consumer Price Index, CPI rose in January for the second month running 4%, questioning the government's target of 30% inflation in 2021. In effect twelve-month inflation reached 38,5% in January, following on the 4% for December, according to the latest release from the country's stats office, Indec.

The items with most impact were telecommunications with a 15% increase, followed by hotels and restaurants (summer season in Argentina) 5,4% plus Food and Beverage, 4,8%. In this last item, fruit and vegetables, plus meats experienced the highest jump. Authorized increases in transport and fuel prices led to a 4,6% rise in the item.

A recent central bank poll forecast that Argentina would face 50% inflation in 2021, far above levels the government is aiming for, and anticipated in the federal budget, which has seen the government put pressure on farmers to help keep prices low. Likewise an agreement with abattoirs to deliver some special cheaper beef cuts with a 30% discount.

However this is not the end of story, since the above values, 4%, refer to the whole country and while the so called Great Buenos Aires registered a CPI of 3,3%, according to Indec, in the northeast region, CPI reached 5,5%; the Pampas region, 4,6% and Patagonia, 4.1%.

Despite the percentages, Argentina's Economy minister Martin Guzman in two meetings this week before businesspeople in Tucuman and in Buenos Aires City, including union leaders reiterated that the objective of his policies was to bring down inflation five points, closer to the 29% anticipated in the federal budget. To achieve this he is planning to keep the foreign exchange adjustment for 2021 at 25%, and hopefully convince business people and union leaders to agree on a prices and salaries understanding.

It must be mentioned that in 2020, official CPI in Argentina was 36,1% with many prices and services under control, which helped bring down 18 points the 55% of 2019. But the evolution of prices in the last quarter has not been encouraging, in effect the November year to year was 35,8%, but then in December y/to/y was up to 36,1% and in January, 38,5%.

Last but not least it must be remembered that according to official stats from the Catholic Church over 40% of Argentines are living below the poverty line, which means that the item Food and Beverage has a significant impact, and in all regions of the country it was above the official 4%, much closer to 5%.

Categories: Economy, Argentina.

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