Inflation in Argentina spiked to 94.8% during 2022 according to the official statistics institute, the INDEC. Last year’s figure was the highest since 1990, a time when hyperinflation drove prices up by 2,314%.

Last month’s inflation was 5.1%, a 0.2% increase from November (when it was 4.9%), but down from mid-year highs of 7.4% in July and 7% in August.

The economic area that saw the biggest price climb in 2022 was clothing, which marked a 120.8% increase. Last December, Economy Minister Sergio Massa reached an agreement with the Argentine Chamber of the Clothing Industry (CIAI) to freeze their prices up to February 28.

During December, the division that saw the highest increase was hospitality, which spiked by 7.2%.

However it was food prices, with a 95% yearly increase and a 4.7% monthly climb, that contributed most to the index increase. In November, Massa announced “Fair Prices”, which froze the value of some 1,400 products, most of them foodstuff.

According to the EcoGo consulting firm, “December was a month of good news for the government. With the November inflation figure just below expectations, the Fair Prices program seems to be delivering and the year is closing below 100%”. However, the firm, headed by Marina Dal Pogetto, doubts the success of the price agreement program and suggests the slowdown in food prices may be a consequence of “other factors”. 

Among them, EcoGo lists the slowdown in meat prices “due to the cattle over-supply caused by the increase in the feeding costs after the drought and the Chinese market’s restrictions”, with vegetable prices following a similar trend.

“These factors, along with a certain stability in the rest of the macroeconomic variables, seem to explain the price behavior in December. It’s worth noting that this situation is still feeble and, without a concrete stabilization plan, any change in the conditions could lead to a new price acceleration,” concludes the EcoGo report.

“Last year, we had two big shocks the increased inflation: the first one was the war in Ukraine, which generated an greater pressure in energy, food and transportation. So, we had some imported inflation. The second one was Martín Guzmán’s exit in July,” said Santiago Manoukian, research lead from business consulting firm Ecolatina.

He added that prices would likely continue to rise in the face of a drought, utility tariff hikes, salary dynamics, and possible rises in beef prices.

He felt inflationary pressure could ease so long as there were no future shocks comparable with the Ukraine war and Guzmán’s resignation, adding that broad price agreements and moderations to the crawling peg exchange policy would help dampen price hikes.

He said the government’s goal of pushing inflation below 4% by April would be hard to reach, but described it as a “healthy sign”.

The government believes inflation has multiple causes. “Inflation requires Argentina to walk a path that includes fiscal order, trade surplus, reserve accumulation and an interest rate that increases peso operations. Nobody can magically solve a structural problem,” said Economy Minister Sergio Massa last November.

With a seemingly never-ending struggle with inflation, Argentina reached a 32-year record last year. During his budget presentation in 2021, then-Economy Minister Martín Guzmán had projected a 33% price hike for the entire year, which now seems utopic. His untimely resignation last July amid political turmoil further disturbed the economy, stoking a steep price rise that hasn’t been fully resolved.