Thousands of Argentinians swamped the streets to protest against the sky-high inflation. Even though the entire world is reeling from the soaring prices, Argentina has its worst. Inflation in the year through August hit 78.5%, while the prices went up 56.4% in the initial eight months.
Rising Inflation Rate in Argentina
Perhaps, no other major world economy knows about managing inflation better than Argentina. The South-American country has the highest inflation rates in the world. The people have been suffering and dealing with soaring prices for almost the last half-century. The situation has worsened further due to the increasing fuel and food costs globally.
So much so that the country’s central bank continues to print money to make up for the fiscal deficit. Argentina owes billions of dollars to the IMF.
The monthly inflation went beyond forecasts and jumped to about 80% from a year ago. Even though the central bankers and officials are trying to control the prices. In September, the inflation rate in Argentina increased to 83% from 78.5% in August 2022.
The Government’s Role
The increasing inflation has also affected the popularity of the center-left government of President Alberto Fernandez before the elections next year. During his three-year tenure, the President has implemented multiple policies such as currency controls, price freezes, and import restrictions. However, they have failed to better the situation due to the absence of a proper economic plan.
Despite the formulation of a plethora of policies, nothing could affect the major currency devaluation because the Argentinian government controls the official exchange rate with a decreasing amount of cash reserves.
How Is the Argentinian Population Coping?
When it comes to money, Argentinians share a complex relationship with it. Almost all of the country operates on physical cash. 4 in 10 Argentinians live below the poverty line. There is no value in paper money. People don’t trust banks and keep their money with them. Moreover, they try to spend it as soon as they get them. People with higher wages convert their pesos into US dollars as soon as they get paid or any currency that seems to be devaluing less compared to the peso.
When the pandemic hit, about 60% of children we living in poverty. The situation of inflation in Argentina is the worst that can happen in any society as the richest are getting richer and survival has become extremely difficult for the poor. Within a week, the prices of commodities seem to double up.
What Does The Future Hold?
In a survey, economists estimate that the official rate ending this year would be 173 pesos per dollar. Also, it is expected to reach 310 per dollar by the end of next year, indicating a faster decline. The central bank of Argentina published a survey in which private economists have predicted triple-digit inflation. Never been seen in Argentine since the early 1990s when the country was severely hit by hyperinflation.
