Argentina’s monthly inflation rate was 12.4% in August, according to the National Institute for Statistics and Census (INDEC, by its Spanish acronym). The figure is almost double that of July and represents the highest monthly rate since February 1991, when the country was mired in a hyperinflation crisis.
INDEC’s report, the first since the PASO elections, is the first to reflect the 22% devaluation that raised the official exchange rate for the US dollar to AR$350.
Year-over-year inflation hit 124.4%, and the total inflation for the first eight months of 2023 was 80.2%, according to Tuesday’s report.
Food and drink had the greatest impact on the index, with the cost of meats, derivatives, vegetables, and legumes increasing by 15.6%.
The health sector saw the second-biggest jump (15.3%), driven mainly by spikes in the prices of medications. “Home maintenance,” which includes household cleaning products, followed with an increase of 14.1%.
Consulting firms blame August’s record inflation on the devaluation, which they say was disorganized and not part of a comprehensive plan. “As we have been arguing, devaluing in one stroke without a program was only going to lead to an escalation in the nominal rate,” said the consulting firm Eco Go in a report published earlier this month.
“While we all expected double-digit inflation, it’s impactful when you track the numbers historically,” Milagros Suardi, an economist at Eco Go, told the Herald. “If annualized, these numbers would surpass 300%.”
Suardi also noted that meat alone accounted for 2.4 points of inflation and that rises in food prices — especially in the north of the country — were behind the record rate.
Eco Go predicts an 11% inflation rate for September.
“Even with different price programs and the tariff freezes, food prices will be in double digits,” she said. “Most of the increases took place in the last two weeks of August and will have a carry-over effect.”
Eco Go is not the only consulting firm predicting double-digit inflation. In a report of its own, Ecotina noted that an acute shortage of reserves “is just another element that adds uncertainty to the macroeconomic scenario, once again de-anchoring inflationary expectations.”
The Central Bank announced a devaluation on Monday, August 14. Economy Minister and Union por la Patria presidential candidate Sergio Massa made his first public appearance the following Wednesday night in a TV interview with TN.
That week, the Economy Ministry announced price agreements with different economic sectors in an effort to limit the inflationary effects of the devaluation. That effort has largely failed.
Inflation is a hot-button issue in this year’s presidential election, especially with Massa as the Peronist presidential candidate. In his national budget for 2023, he anticipated a 60% price increase for the year. To achieve this number, prices would have to drop 20% over the next three and a half months, something no consulting firm believes is feasible.
Shortly after INDEC released the monthly inflation rate, Juntos por el Cambio presidential candidate Patricia Bullrich took aim at the ruling coalition on X (formerly Twitter). “It is not only inflation. It is the number that summarizes the tragedy that Massa and Kirchnerism have left us,” she wrote.
INDEC will publish September’s inflation rate on October 12. It will be the final inflation index to be published before the presidential elections, which are scheduled for October 22.