January data shows Argentina’s annual inflation rose to 98.8%

Monthly figure of 6% in January shows inflation kept speeding up last month.

Consumer prices in Argentina rose by 6% in January, according to government statistics and census institute, INDEC. Year-on-year inflation hit 98.8%, with values soaring above 100% in several economic sectors.

The number is almost one percentage point higher than December, when inflation reached 5.1%, and the highest monthly figure since November, when it marked 6.3%.

“Foods and non-alcoholic beverages” is the division that had the biggest influence on the index, with a 6.8% monthly increase. Fruits, vegetables, tubers and legumes drove the increase, together with bread, cereals, and meats which also saw an above-average, albeit lower, increase.

The division that increased the most was “recreation and culture,” which soared by 9% mainly due to tourist services and cable TV . Housing and communications shared second place, with an 8% increase, caused by increases in utilities and phone and internet bills.

The two divisions that rose the least in January were education (1.1%) and clothing. In 2022, clothing was the division that saw the highest jump.

Last November, Economy Minister Sergio Massa said he hoped for a slow but steady reduction of inflation that would see the monthly rate drop below 4% by April.

The Minister said on Monday that January’s figure constituted “a challenge that makes us keep taking measures”, adding that he would announce macro- and microeconomic strategies during the week to curb soaring prices.

Massa was speaking during an announcement of a beef discount program in supermarkets and butcher shops. “The lack of fodder for livestock due to droughts in a great part of our production process marked an increase in its values, especially in January,” he said.

According to a report by the EcoGo consulting firm, continued high inflation was prompting investors to “lose appetite” in fixed-rate bonds and turn to inflation-indexed instruments instead.

In its 2023 budget, the government forecasted a 60% for the entire year.

However, Ecolatina predicted in its January report that 2023 inflation will be in the “90-100% zone” despite price agreements and the moderation of the crawling peg (the official devaluation of the peso compared to the US dollar).

The Market Expectations Survey conducted by the Central Bank showed that banks and consulting firms are expecting a 98.5% average inflation rate for 2023. Similarly, the survey’s top ten forecasters expect it to be 95.5%.

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