From the war against inflation to the 3-digit number: the long road of escalating prices

On March 15, 2022, just over two weeks after the Russian offensive against Ukraine was launched, President Alberto Fernández declared a “war on inflation and speculators” before the data for February of that year was known. which yielded 4.7% and an interannual increase of 52.3%.

Twelve months later, the data is compelling and that war has more losers than winners. After 32 years, Argentina returned to triple-digit inflation: 102.5% in the interannual measurement, the highest since at least September 1991 prior to the Convertibility plan. An inertia that, for analysts, has little chance of calming down, especially in the midst of an election year.

Also read: Inflation in February was 6.6% and accumulated 102.5% in the last year

The harangue made by the President in March, who in the following weeks sought to temper the escalation of prices -which has “multiple causes”, as the Executive repeats-, with agreements for the values ​​of “sensitive” products (food and basic basket that weighs more on those who have less) and subsidies for flour for bread and sunflower oil. it was blurring.

All this expression of desires collided, as 2022 progressed, with exchange rate instability and the effect of expectations that left price indices above 7% towards July and August, after the untimely departure of the Economy Minister Martín Guzmán and the arrival to the Treasury of Sergio Massa.

The minister managed to show a two-month period with numbers more similar to the beginning of 2022 (4.9% in November, the second lowest inflation of all of last year, and 5.1% in December), but than in the first two-month period of 2023 they returned to move above 6%, with which their perspective that the CPI could be seen towards April “starting at 3%” is increasingly moving away.

thirty years is nothing

Although the Government was already preparing for the bad data for February and is surely gritting its teeth for what will be March (with the increases in regulated services and food mainly), triple-digit inflation was an unavoidable ghost due to the inflationary dynamics that the most memorable or the most advanced in years remember perfectly.

A study by the University of Belgrano reveals that since the Second World War, Argentina had on three occasions (this would be the fourth, although not in “a calendar year”) an inflation rate that exceeded 100% per year, not counting the periods after these events of hyperinflationary rates, with more than 3000% in the late 80s and 90s.

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The report indicates that the first time the CPI was above 100% was in 1959, with the presidency of Arturo Frondizi. Remember that on December 29, 1958, the president had announced the launch of a stabilization and economic development plan backed by the International Monetary Fund.

The liberation of prices and the unification of the exchange market led to a skyrocketing of prices that was reflected in an annual rise of 113.7%, it indicates.

The three-digit threshold for price escalation was crossed for the second time in 1975. With the Ministry of Economy, Celestino Rodrigo, who launched a shock plan that included a 100% increase in the exchange rate and an increase of tariffs and fuels of up to 180%. The registered price variation was 182.8%.

The following years, in the midst of the military dictatorship, were also marked by high inflation, with a peak of 444.1% in 1976. Only with the democratic government of Alfonsín and after the so-called “austral plan” was it achieved in 1986 -the year of the World Cup in Mexico- lower the IPC to less than 100%.

Although the numbers once again exceeded 100% from 1987 until 1989, when an annual price variation of 3079.5% was registered.

Only in 1991 did inflation fall below 100% with the Convertibility Plan, which would culminate in negative variations (deflation) in the price index in 1999, 2000 and 2001, although with a sharp rise in unemployment, which closed that period at 21, 5% and the traumatic departure of the “one by one” and the government of Fernando de la Rúa.