Buenos Aires Herald Editorial

International visitors traveling to Argentina expecting a cheap trip are in for a shock. Last year, the country was making international headlines for how cheap it was at parallel rates. Tourists exchanged tips on how to get the blue dollar rate. Analysts gazed aghast at the brecha, the yawning gap between official and parallel rates.

It didn’t last.

Ballooning inflation, which has worsened since Milei took power and decided to let the market rip, has been accompanied by tumbling blue and MEP dollar rates. This was driven by Argentines selling their dollar savings to cover climbing costs, initial market confidence in Milei’s moves, and policies letting exporters access the parallel rate.

So, if your food shop now costs more pesos, and those pesos also took more dollars to acquire, then bam: Argentina is getting more expensive in dollars.

Milei is patting himself on the back, claiming that two months in which monthly inflation has declined and fiscal surplus are signs his policies are working. But a weaker dollar on paper doesn’t mean the peso is suddenly strong, and what the president leaves out from the self-congratulatory posts is the cost. What looks like good news on the fiscal front is due to a recession that is hurting the lives of regular citizens, who are cutting back on everything they can just to scrape by.

A recent study by the Argentine Confederation of the Medium Enterprise (CAME, by its Spanish acronym) showed that retail sales in February suffered a 25.5% interannual drop. While wages may be worth more in dollar terms, their purchasing power continues to plummet, with inflation still soaring and salaries in the private sector at their lowest level since 2002, when Argentina was suffering the worst crisis in the country’s history.    

The situation has not gone unnoticed by other actors following Argentina’s reality up close. Speaking recently at the United States Chamber of Commerce in Argentina Summit, U.S. Ambassador Marc Stanley said that the Biden administration was “concerned” with how the economic reforms were affecting the country’s most vulnerable. 

IMF First Deputy Managing Director Gita Gopinath made similar remarks in a statement published after a short trip to Argentina last month, warning that it was necessary to guarantee that the burden of the austerity measures did not fall disproportionately on the backs of working-class families.  

The government-triggered recession combined with the relative strengthening of the peso with the dollar makes us wonder how long Argentine society can endure earning extremely low salaries in pesos while simultaneously incurring costs in dollars, with prices equal that could make tourists balk. 

For now, opinion polls show that Milei continues to have support. The government knows this and seeks to steer public discourse away from the impact of the economic crisis with its simple but effective deadcatting strategy. 

But as we say in Spanish, “you can’t cover the sun with your hand”: there’s only so far outlandish distractions can take you. Because if we anchor ourselves in reality, the point isn’t that workers’ stagnating salaries are now worth more dollars than they were a couple of months ago. It’s that when those workers reach the supermarket shelves, it feels like they’re worth nothing at all.