April inflation was 8.4% according to the National Institute for Statistics and Census (INDEC, its Spanish acronym), making it the highest monthly figure since April 2002. The second-highest monthly price hike since that moment was one month ago, with 7.7%.

Meanwhile, year-on-year inflation hit 108.8% and the total inflation for the first four months of the year was 32%, according to the report published today.

Food prices had the biggest influence on the index, with a 10.1% monthly increase. The price hikes, which were 1.7 percentage points higher than the general index, were caused by increased vegetables, dairy products, eggs, sweets, and meat prices, according to the INDEC.

Argentina is the country with the second-highest food inflation, with a 107% year-on-year increase in March, said the World Bank in a report published last week. It was only topped by Lebanon with 352%.

A report by the Center for Argentine Recovery (RA, its Spanish acronym) from the Buenos Aires University projected that yearly food inflation could reach 197% if the trend for food prices from April and March continues.

“Clothing” was the sector that increased the most compared to last month, with a 10.8% monthly increase. The two sectors that rose the least in April were education (5%) and alcoholic beverages and tobacco (3.8%)

Today’s number comes following a controversial back-and-forth by the INDEC two weeks ago when they temporarily changed the publication date.

Hopes and forecasts

The monthly inflation was higher than expected by most of the private sector. The Central Bank’s Market Expectations Survey (REM), which averages forecasts from different consulting agencies and banks, predicted a 7.5% average inflation for April and 126.4% for the entire year – 16.4 points more than last month.

Last November, Economy Minister Sergio Massa said he hoped for a slow but steady reduction of inflation, with a monthly rate below 4% by April — instead, it has more than doubled that. 

In its 2023 budget, the Economy Minister forecast a 60% inflation rate for the entirety of the year. Last month, the International Monetary Fund (IMF) detached itself from Massa’s forecasts, increasing the projected yearly inflation for the country from 60 percent to 88 percent.

Inflation measured at the local level has also been on the rise, with the official statistics institute in Buenos Aires City announcing this week that prices rose by 7.8% in April.

Consulting firm Ecolatina forecasted that inflation will be high and “unstable” in the following months, and said it will exceed 115% over the year.

“The process is fueled by a strong inertia, growing indexation and shortening of contract terms, together with the uncertainty of the electoral transition, the lack of credibility to coordinate expectations and the absence of anchors: new increases in utility tariffs, a crawling peg that will not be able to slow down and wage rounds that will exert pressure in the electoral year,” a report published last week said.

The report also said that import restrictions mean that the prices are more sensitive to increases in the parallel exchange rates.

Three weeks ago, after a run against the peso that increased the parallel exchange rates, Massa said that it was “inexplicable” that companies tried “to increase prices based on the informal dollar surge because imports are made at the official dollar rate.”

 “The impact of devaluation expectations and the impact of the ‘agricultural dollar’ on certain food products” would also put pressure on prices, Ecolatina said, referring to the “agro dollar III.”
The Economy Ministry has been trying to control inflation with a price agreement program called Precios Justos (Fair Prices). Two weeks ago, it fined multinational companies Coca-Cola and Danone for selling products with monthly price increases up to 10 times over the established limit.