A 'war' against inflation: without planning, the government analyzes isolated measures to prevent price spikes

President Alberto Fernández used an army of metaphors to mark the beginning of a “war”, referring to the price. The policy of combating inflation will continue after 4.7% starting next Friday. February recorded a higher inflation index than expected. In the same tone as the President's speech, the government has a limited army of measures and regulations aimed at combating inflation. Like various types of contracts with entrepreneurs, the light is the possibility of increasing export duties on certain agricultural products, other “technologies” that are part of the agreement with the IMF (for example, raising peso rates).

The economic team is still trying to measure the impact on food and energy prices, assuming that international shocks have an immediate impact on internal values. The first victims were products derived from wheat and corn, which, according to official diagnoses, showed significant growth at the same time. The war began in Ukraine over the past three weeks. At the end of the year, during the busiest month of winter, a shock wave will occur due to rising costs for imported gas.

On an international level, this disruptive scenario questions some statements already recorded in the Memorandum of Understanding with the IMF, which will be discussed in the Senate in the future and will be approved by the Fund Committee after several hours of debt accrued next Monday. This year, the inflation target was 38-48%, which did not meet the expectations of the private sector and the deadline for analysis. According to some analysts, annual inflation (8.8%) in the first two months means that the case price increase will be much higher by 60%.

As of next Friday, the president's “war” expression on the risk of inflation in official offices, not related to economic governance, is due to the fact that parliamentary work was concluded in the Senate. The agreement with the IMF, which began in February 2020 as a private equity holder, will already lead to a page change in the coming years, with the economic roadmap, a long chapter in global debt negotiations on dollar debt by the Government of Frante de Todos.

One official recalled a similar metaphor used this afternoon by Adolfo Carnitrott, Deputy Minister of Economy of Raúl Alfonsin, 30 years ago. They ironically commented on the mention of the war president in the office.

The truth is that there have already been several battles against inflation failures.For example, there are some price freezing programs that were not effective in curbing gondola rise in the two years and months of the FrontToDist order. The order was changed by the Ministry of Internal Trade because it was not possible to establish a specific price dam. The last alternative sought by the government was through a special trust agreed between the exporter and the supermarket that subsidized the local price of certain products such as oil. The purpose of these events was It was an international and internal value.The purpose of these events was to value It was about “separating”.

This is the “preferred” measure of current economic management to combat inflation in the Ministry of Economy reading, but the situation caused by the military conflict in Europe forces them to change the scenario and make decisions of a different kind. The contrast is clear. A few weeks ago, when the war had not yet broke out in Ukraine, senior officials of the economic team categorically ruled out not touching export tariffs.

Negotiations between the Ministry of Internal Trade and mass consumer companies will be held in the coming weeks. In early April, it is necessary to restore a care pricing program that includes a large food and drink basket.Negotiations will begin to determine the growth rate of 1300 products in the coming weeks, and the adjustment in January was 2%.

IMF transactions include “dynastic” views such as combating inflation, no dollar, monetary and fiscal policies, and adjusting expectations, and the expected price increase range for this year ranges between 38% and 48%, and agreed with the agency's technicians. Even private consultants and scientific schools involved in Kirchnerism believe that the essence of long-term economic programs is inflation in nature, and expect higher interest rates than officially expected issues.

According to a memorandum of understanding sent by the administration to Congress, the government and the Monetary Fund expect the inflation horizon to rise below 30% by 2024.

The Proyecto Economico Research Center, owned by former deputy director Fernanda Vallejos, said: “In light of January data stating that the monthly inflation rate for the remaining 11 months of 2022 should not exceed 3.27% per month, to achieve this, the growth of monetary rules inflation (international inflation) and the new tariff policy lead to an increase in inflation.

Chief Economist Consultant Lorena George said: “Even after inflation targets are exposed to international prices, balance companies. If we look at this year's data and the first forecast for February, there is no tariff adjustment, or the acceleration of the rungs entered is about 4% higher, which is the floor of the monthly inflation for the rest of the year.” He said.

Secretary Guzman has repeatedly received consultations between lawmakers and senators between last Monday and yesterday on how relevant the program is to the feasibility of the projected inflation provided with the IMF. The official said, “Expected inflation is everything,” but it opened a window into the possibility that international price shocks caused by the war in Ukraine include scenarios that exceed expectations, especially in terms of energy costs.

“The war between Russia and Ukraine is taking place in Argentina, and today it can be seen from the prices paid for everything related to goods, such as wheat, eggs, milk, oil, products that consume consumption baskets,” Guzman said. “Over the past three weeks, the impact on food prices has been significant and obvious. What needs to be done does not mean a situation where these shocks seriously disappear.” Guzman continued.

Likewise, Chief of Staff Juan Manzour said that the tools used by the government were personal price transactions through trusts that subsidize local prices (for example, oil), but “there are other types of measures, such as the Ministry of Agriculture. It was necessary to take Julian Dominguez (see. Temporary export closure) is understood as part of an absolute exception.” The Prime Minister said because of the war in Ukraine.

This Tuesday, Alberto Fernández spoke more directly about the price situation. “Every time we thought that everything was going well, everything became more complicated. When we think that the pandemic can make us develop freely, Argentina is experiencing wars that come in the form of Europe and economic complications that affect the whole world.” The President said. “The biggest complication is that the war has caused a huge fight for food, and prices are flying around the world. “He added.

“The inflation war in Argentina began on Friday, hoping to be able to clarify the debt issue this week.

Inflation in February was 4.7%, accumulating 52.3% last year, making the monthly interest rate higher than expected. According to the diagnosis of the Ministry of Economy, prices showed the immediate impact of military conflicts in Eastern Europe. The Ministry of Finance reported that “this indicator was affected by the impact of rising international prices of basic goods due to drought and conflict in Ukraine.” At the end of the last month of the IPC 4 days ago.

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