Argentina's Macrisis: Inflation exceeds 50% for the first time in 27 years
Data published today by Argentina's Statistics and Census Institute (INDEC) show consumer prices rising by 3.8% in February, and 51.3% from the same time last year.
The annual rate of 51.3% is the highest such reading since January 1992, as Argentina was emerging from a hyperinflation crisis. INDEC's 'basic basket' inflation was even higher: 55.8%.
Price increases last month were led by food and beverages (5.7%) and housing and utilities (6.4%).
Utility rates have increased sharply since President Mauricio Macri cut subsidies and deregulated rates in April 2016: rates are up 3600% for electricity, 2400% for gas, and 1000% for water - leading to unpaid debts of $450 million for light bills alone, according to wholesale power administrator CAMMESA.
February's rate hikes sparked nationwide protests. An entire town (seaside Villa Gesell) was threatened on February 28 by CAMMESA with having their electricity shut off over a $4.5 million debt.
These hikes far outstrip overall price increases of 188% since Macri was elected in November 2015. Real wages have fallen by 18% since then.
February's 3.8% monthly rate, compared to 2.9% in January, came despite a relative stability in the U.S. dollar exchange rate since September at around 40 pesos (currently 41.76) - the result of short-term rates of 64% and some $29 billion borrowed since June from the IMF.
Central Bank head Guido Sandleris reacted to today's news by promising to "flight inflation with no shortcuts." He pledged to slow monetary base growth (30.6% as of February) even further, leading to concerns Argentina's recession could deepen.
GDP had already fallen 7% as of December - the worst reading since the 2002 collapse.
The easiest thing
Macri was narrowly elected in 2015 by promising to beat inflation - already running at 25% annually under his center-left predecessor, Cristina Kirchner.
It's the easiest thing, he boasted at the time. "Inflation is a sign of government incompetence, and with us it won't be an issue."
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The seaside resort town of Villa Gesell.
Villa Gesell became an unexpected poster child of Argentina's ongoing Macrisis when, on February 28, the national wholesale power regulator CAMMESA threatened to turn the lights off over a $4.5 million debt.
CAMMESA admitted that nationwide, some $450 million in power bills remain unpaid - just at the wholesale level.
