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Wednesday, February 28, 2024

Argentina Faces Economic Crisis as Inflation Tops 100%

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Argentina’s inflation rate has soared past 100% for the first time since the end of hyperinflation in the early 90s, putting pressure on the government and hurting millions of people.

According to official data released on Tuesday, inflation hit 102.5% in February, meaning the price of many consumer goods has more than doubled since 2022.

The monthly rise in the Consumer Price Index (CPI) was 6.6%, higher than expected by analysts and well above the central bank’s target range of 1-3%. The year-to-date increase was 13.1%.

The main drivers of inflation were food and beverages, which rose by 8.4% in February; housing and utilities, which increased by 7.9%; and transport, which went up by 6.8%.

In Argentina’s markets, shops and homes, the impact of spiraling prices is being felt keenly as one of the highest inflation rates in the world stretches people’s wallets.

With inflation so high, prices change almost weekly.

The government has tried in vain to tame the rising prices, which dent people’s earning power, savings, the country’s economic growth and the ruling party’s chances of clinging onto power in crunch elections later this year.

The government has implemented various measures to curb inflation, such as capping prices on some essential goods, limiting grains exports to boost domestic supply, and tightening monetary policy.

However, these measures have failed to contain inflationary pressures, which are fueled by high public spending, a large fiscal deficit, a weak currency and external shocks such as rising global commodity prices.

On the streets, inflation is all many people can talk about. It seeds frustration and anger as salaries often fall behind the cost of goods.

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