MercoPress. South Atlantic News Agency

Argentina's inflation for 2022 reported at 94.8%

Wages have lagged considerably against inflation, sinking scores of Argentines into poverty

Argentina's inflation for the year 2022 has been reported to stand at 94.8%, the highest in 32 years, according to the report by the National Institute of Statistics and Census (Indec) released Thursday. It was also one of the highest in the world.

The consumer price index (CPI) grew 5.1%, an improvement from July's 7.5%, but nevertheless above November's 4.9% increase.

”The first objective that the Minister of Economy, Sergio Massa, set when he took office (in July), was that inflation would not be three digits at the end of the year -as some consulting firms were forecasting-, and that important bimonthly reduction would be proposed. We understand that this objective is being met,” Presidential Spokeswoman Gabriela Cerruti said.

The items that suffered the highest price increases were clothing and footwear (120.8%), restaurants and hotels (108.8%), Housing and Utilities (80.4%), and Communications (67.8%).

Such high inflation had last been recorded in 1991, after two years of hyperinflation surpassing 1,000% in 1989 and 1990.

Argentina ended 2022 with an estimated growth of 5%, after a 10.3% expansion of activity in 2021 that put an end to three years of recession. For 2023, a 2% growth is forecast for the South American country, against the backdrop of a general slowdown in the global economy. This is, in any case, one of the highest levels in Latin America, according to this week's World Bank review. Despite a sustained recovery and falling unemployment (7.1%), wages have lagged behind inflation, with sharp losses in purchasing power. As a result, many Argentines fell into poverty, which affects 36.5% of the population of almost 47 million inhabitants in a year during which a new president will be elected in October.

After knowing the yearly inflation figures, the Central Bank (BCRA) chose to keep the benchmark rate unchanged at 75% per annum, although it will continue to closely monitor the Price Index (CPI) because “it will contribute to consolidate financial and exchange rate stability, and to reinforce the trend of gradual deceleration of inflation in the medium term.” The BCRA also said in a statement that will “continue to observe the evolution of the inflation rate.” The BCRA argued that “the calibration of interest rates in positive territory in real terms guarantees the protection of savings in pesos and contributes to keeping exchange rate expectations anchored, favoring the disinflation process.”