Argentina: inflation decelerates to 8.8% in April, recession impacts – 05/15/2024 at 09:28

Argentina: inflation decelerates to 8.8% in April, recession impacts – 05/15/2024 at 09:28
Argentina: inflation decelerates to 8.8% in April, recession impacts – 05/15/2024 at 09:28

Inflation in Argentina stood at 8.8% in April, the fourth continuous month of deceleration under the ultraliberal presidency of Javier Milei, but still at a spectacular 289.4% over twelve months, and with all eyes now turned to the impact of the recession.

Javier Milei, in the United States, May 6, 2024 (GETTY IMAGES NORTH AMERICA / APU GOMES)

The April price index, published Tuesday by the National Institute of Statistics (Indec), fell below 10% for the first time in six months (October). And continues the deceleration trend, after 25.5% in December, 20.6% in January, 13.2% in February, 11% in March.

In corrected data, inflation in Latin America’s third largest economy still reached 65% over the first four months of 2024, and 289.4% year-on-year, an unprecedented rate for 33 years.

April inflation was driven upwards by water, electricity, gas and fuels in particular, in connection with the gradual drying up of public subsidies paid for a long time to these sectors, with the aim of “zero deficit” budget at the end of 2024.

But the impact of the 54% devaluation (in December), liberalized prices, dried up subsidies, paralysis of public projects, anemic purchasing power and consumption, is gradually sinking Argentina into recession.

Industrial production fell 21% year-on-year in March. Construction of 42%. And consumption, projects the Focus Market firm, fell by 20.4% year-on-year in April.

The Argentine economy is expected to contract by 2.8% this year, according to the International Monetary Fund, after already a decline of 1.6% in 2023.

“We are crushing inflation,” launched a triumphant Milei on Tuesday, shortly before the announcement of the April index, which analysts forecast below 10%.

“Prices are increasing well, but not as catastrophically as a few months ago. It looks like it is stabilizing, but since wages are not keeping up with inflation, it’s as if we’re not seeing any change.” , translated for AFP Marilina Gil, a 46-year-old supermarket employee.

On Monday, the IMF welcomed “faster progress than expected in the restoration of macroeconomic stability” in Argentina, and in particular “the first quarterly budget surplus in 16 years”. But he also underlined the “long and difficult road ahead”, in particular to “liberate productivity, private investment and formal employment”.

Informal employment in Argentina reached 45.3% at the end of 2023, poverty 41.7% according to official figures, even before the impact of austerity measures.

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