Argentina Inflation For December Made New Record

 Argentina Inflation For December Made New Record

Argentina'S Inflation For December Reached 28%, According To Forecast.

According to the latest forecast from economists, the inflation rate (monthly) in Argentina will likely touch 28% during December. If this happens, it would be the highest monthly inflation in the 1990s.

But what's causing such a big jump in monthly inflation? It all started when Argentina's new government devalued the local currency.

Annual Inflation To Cross 200%

poll was conducted in which 20 economists shared their forecasts for inflation in Argentina. According to them, the annual inflation in Argentina for 2023 will likely be above or near 200%. Right now, no other country with such a high inflation rate suggests that Argentina needs to make some significant changes.

The new government devalued the peso by more than 50%, which also led to a surge in inflation. The previous government used capital control measures to keep the peso currency strong.

The devaluation also opened the floodgates of inflation, which appeared in transport, apparel, & food items. However, the move by the government has narrowed the spread from the parallel currency rate & to the official rate.

According to one chief economist, the acceleration in inflation is mainly because it was delayed artificially. The increase in the wholesale FX rate led to a noticeable increase in food prices. The monthly price increase of beverages and food items is almost 35%.

For now, the monthly inflation forecast during December is 16.9 - 31.5%, which suggests that the reading can be anywhere between this range.

Over the last few years, inflation has shown a consistent uptrend over the last few years as fiscal deficit & and a weak currency continue to put pressure. To make matters worse, Argentina's government is also printing money at a record pace to manage the finances.

As a result of these economic choices, Argentina's foreign currency reserves are already in the red, and the deadline for debt payments is just around the corner.

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