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Bloomberg
Argentines face the prospect of 90% inflation by year end after the economy minister’s exit triggered overnight price rises and the central bank comes under pressure to let the peso depreciate more rapidly.
That would be the fastest pace since hyperinflation three decades ago, and the highest rate in the world outside Venezuela and Sudan, according to forecasts from the International Monetary Fund (IMF).
The dramatic exit of former Economy Minister Martin Guzman led to price mark-ups by many businesses. Some Argentines raced to the shops the morning after Guzman quit, to try to stock up ahead of peso devaluation and price hikes.
Consulting firms in Buenos Aires, such as EconViews, FMyA, Alberdi Partners and EcoGo, are predicting 2022 year-end inflation of 90%. One forecaster, FIEL, expects consumer prices to rise 92%, while some other analysts, such as EcoLatina and Empiria Consultores, see inflation ending the year at 85%.
Argentina’s parallel exchange rate, untethered from the government’s strict currency controls, has fallen 17% so far this week, prompting Buenos Aires shop owners to post signs announcing a 20% mark-up on all listed prices.
Before Guzman’s exit, economists surveyed by the central bank had been forecasting year-end inflation of 76%. Money-printing to finance government spending and rising international commodities prices have also contributed to galloping price rises.
Looking ahead, analysts see the government of President Alberto Fernandez without tools or a credible strategy to cool inflation. Some expect the central bank to speed up its daily devaluations of the peso, which would allow it to spend less money on defending the crawling peg, though this would put even more pressure on prices.