Argentina’s Inflation Increased to 138% Ahead of Presidential Election

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Argentina is thrown into poverty as inflation surges to its highest level in three decades. As the country prepares for their presidential election, it is safe to say that the winner of the upcoming election will be faced with an economic crisis.

In September, consumer prices increased by 12.7% compared to the previous month, and above economists expectations which is 11.5%, and the second straight double-digit monthly increase. A year ago, inflation increased to 138.3%, this is said to be the highest level since the early 1990s when Argentina was exiting hyperinflation.

In the middle of this inflation, Argentina’s central bank raised the country’s benchmark interest rate to 133% from 118%. The impact of inflation was aggravated by the government’s nearly 18% devaluation of the peso in mid August, which coincided with the central bank’s previous interest rate increase from 97% to 118%.

Clothing and recreation took the lead in price increase in September. Investors in Argentina are already anticipating another devaluation before the end of the year with future contracts pricing the currency at 800 pesos per dollar by December.

As they prepare to cast their votes on Oct. 22 in a wide-open election, voters’ top concern is inflation. Outsider candidate Javier Milei won the August primary, but coalitions for rivals Patricia Bullrich and Sergio Massa finished in a close second and third, respectively. They all have one thing in common; to cut spending to close Argentina’s chronic fiscal deficit, a key element stoking inflation.

 

 

 

 

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