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Argentina’s High Inflation Rates Heighten Disenchantment with Political Establishment
The continuous surge in inflation rates in Argentina has put a strain on the wallets of its citizens, leading to growing discontent with the country’s political establishment. In August, consumer prices in Argentina rose by 12.4 percent compared to the previous month, representing the highest rate since February 1991. This alarming figure could potentially influence the outcome of Argentina’s upcoming presidential race.
According to the government’s INDEC statistics agency, Argentina’s annual inflation rate has reached a staggering 124.4 percent. Economic experts believe that these numbers will undoubtedly place the ruling centre-left coalition on the defensive as the October 22 general election approaches.
While Argentina has been grappling with soaring inflation for several years, August marked the first time in over two decades that the monthly rate reached double digits. Economists predict that this phenomenon is likely to be repeated in September. Against this backdrop of escalating consumer prices, Economy Minister Sergio Massa is attempting to convince Argentinians to elect him as their president.
However, Javier Milei, a self-proclaimed “anarcho-capitalist” and right-wing populist who disrupted Argentina’s political system by receiving the most votes in last month’s national primaries, appears to be the frontrunner to emerge victorious in the upcoming election.
Following the release of the inflation figures, presidential candidate Patricia Bullrich of the main opposition coalition took to social media to express her sentiments, stating, “It’s the number that summarises the tragedy left by Massa.” Recent polls indicate that Milei is leading ahead of the general elections, with Massa in second place and Bullrich in third.
The high inflation rate can be attributed, in large part, to the government’s devaluation of the local currency, the peso, by nearly 20 percent after the August 13 primaries. Martin Kalos, an economist and director at local consultancy Epyca Consultores, explains that “the acceleration [of inflation] is the pass-through of the devaluation.” He further notes that the actual inflation rate may be even higher as the devaluation only accounted for 15 days of August, setting a high floor for September.
The inflation surge in August primarily affected food items, which increased by 15.6 percent compared to July. The price of certain beef cuts even saw a drastic surge of up to 40 percent, according to INDEC. However, the actual increase experienced by consumers in retail outlets is likely to be even higher.
Diego Ponti, a livestock analyst for local consultancy AZGroup, remarks that the price of beef for consumers has risen by 40 to 70 percent since July. He attributes this significant increase to a combination of factors, including the frozen beef prices that remained unchanged for months despite the inflationary economy.
The impact of rising prices on the daily lives of Argentineans is evident. Mariela Suchowieski, an 18-year-old resident, highlights how her diet has been affected by the price hikes, stating, “We don’t even buy beef anymore. We buy it once a month and divide it up bit by bit. Everything is very expensive.”
Suchowieski’s perspective resonates with the sentiment expressed at a rally for Milei in La Plata, where supporters gathered around the man who advocates adopting the US dollar as Argentina’s official currency as a solution to the country’s inflation woes. Milei even took the opportunity to autograph 500-peso bills, which are worth less than $1 in the black market—a stark reflection of the local currency’s depreciation over the past year. The supporters voiced their anger toward the current political leadership.
Juan Pedro Aquino, 61, attending the rally, expressed his frustration, blaming the country’s problems on politicians’ access to what he referred to as the “little machine”—their inclination to print money—a rallying cry for Milei. The widespread anger towards the government presents a particular challenge for Massa, who has unveiled measures aimed at improving the purchasing power of salaries.
Economist Martin Kalos reflects on Massa’s predicament, stating, “Massa is a candidate who carries the burden of being a minister. He is a presidential candidate who must find a balance between the response to the crisis he has been unable to provide as a minister and promising that he could deliver them as president.”