Buenos Aires — The latest inflation data from the Indec, Argentina’s official statistics bureau, has revealed a significant surge in August, with prices soaring by 12.4% compared to July. This 32-year monthly high for the Consumer Price Index (CPI) was a direct consequence of substantial markups triggered by heightened political uncertainty and a devaluation of the peso following the country’s primary elections on Aug 13.
According to the official report, accumulated inflation reached 80.2% in the year-to-date, while inflation stood at 124.4%. year-over-year.
Leading consultancies had anticipated that inflation would reach a double-digit monthly figure in August, while they are also forecasting another sharp increase in September.
This steep jump in inflation stands in stark contrast to the previous month when the general price level increased by a more moderate 6.3%. As predicted by the private sector, core inflation has outpaced the overall rate at 13.8%. Seasonal items also saw a notable increase at 10.7%, while Regulated CPI registered a more modest rise of 8.3%.
The Sharpest Price Hikes
Among the key sectors that witnessed the sharpest price hikes in August, the Food and non-alcoholic beverages category saw the highest increase, recording a staggering 15.6%. This surge was primarily driven by substantial price increases in meat and meat by-products, as well as vegetables, tubers, and legumes.
Health costs also experienced a significant uptick, rising by 15.3%, primarily due to notable increases in the prices of medicines. Household equipment and maintenance followed closely behind, with a notable rise of 14.1%.
The specific food items that saw the most substantial price increases include:
- Regular minced meat: 39.4%.
- Shoulder: 34.1%.
- Rump: 33.3%.
- Pork rump: 32.8%.
- Roast beef: 32.4%.
The Highest CPI Since Hyperinflation in 1989
August’s CPI stands as the highest since the end of the hyperinflation crisis in 1991. Economists have expressed their concerns about the dire implications of such an inflation rate. Alejandro Giacoia, an economist at Econviews, noted that this 12.4% monthly rate is the highest seen since March of 1991 when it reached an annualized rate of almost 310%.
C&T Asesores Económicos indicated that “the monthly variation surpassed the previous peak of 10.4% in April 2002, immediately after the exiting the one-to-one peg for the peso to the dollar.”
Juan Ignacio Paolicchi, an economist at Empiria Consultores, concurred, stating that the data reflects the highest inflation rate since the hyperinflation crisis of 1991. He emphasized that “at this rate, prices are multiplied by four in a single year” and warned that there are no indications of a decline in September.
Lautaro Moschet, an economist at Fundación Libertad y Progreso, expressed his concerns as well, stating that “the very high inflation figure for August leaves a discouraging outlook for the rest of the year, and in September, we will most likely have a double-digit figure again.” He pointed out that the drag from August is already substantial, setting a pessimistic scenario for the future. Additionally, the first week of September has shown a price variation of 3.6%, indicating that prices continue to rise significantly. Consequently, economists estimate that September’s inflation will fall between 11.6% and 13.7%.
