'War' on inflation: without planning, the government analyzes isolated measures to prevent price spikes

President Alberto Fernández used a metaphor military to mark the beginning of a “war”, referring to prices. The policy of fighting inflation will continue after 4.7% starting next Friday. February recorded a higher than expected inflation index. In the same tone as the President's speech, the government has a limited army of measures and regulations to combat inflation. Light, like various types of agreements with entrepreneurs, is the possibility of increasing export duties on certain agricultural products, other “technologies”, which are part of an agreement with the IMF (for example, the increase in the interest rates of the peso).

Economic teams are still trying to measure the impact of international shocks on food and energy prices, assuming they have an immediate impact on internal values. The first victim was a product derived from wheat and corn, which, according to an official diagnosis, showed significant growth at the same time. The war has started in Ukraine in the last three weeks. At the end of the year, a shock wave will occur due to the rising cost of imported gas in the busiest months in winter.

At the international level, this disruptive scenario calls into question some statements already recorded in a Memorandum of Understanding with the IMF, which will be discussed in the Senate in the future and will be approved by the Fund Board after several hours of debt due next Monday. The target for inflation was 38-48% this year, which falls well short of private sector expectations and analysis deadlines. 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 expression of “war” on the risk of inflation in official offices not related to economic governance is due to the fact that parliamentary work has taken place concluded in the Senate. The agreement with the IMF, which began in February 2020 as a private equity holder, will lead to a page change, already in the coming years, along with the economic roadmap, a long chapter in the negotiations on global debt over dollar debt by the Frante de Todos government.

An official recalled a similar metaphor used this afternoon by Adolfo Canitrot, Raúl Alfonsin's Deputy Minister of Economics 30 years ago. They ironically commented on the mention of the president of the war in the office.

The truth is that there have already been several battles against failed inflation. For example, during the two years and months of the FrontTodist order, some price freeze programs that have not been effective in curbing the gondola rise. Due to the inability to establish a specific price dam, the order was changed by the Ministry of Internal Trade. The last alternative sought by the government was through a special trust agreed between an exporter and a supermarket that subsidized the local price of certain products, such as oil. The purpose of these events were international and internal values. The purpose of such events was to “separate” values.

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

In the coming weeks, negotiations will be held between the Ministry of Internal Trade and mass consumer enterprises. In early April, you need to restore the care pricing program, which includes a large basket of food and drinks. In the coming weeks, negotiations will begin to determine the growth rate of 1300 products, and the adjustment in January was 2%.

The IMF deal includes “dynastic” views, such as fighting inflation, no dollar, monetary and fiscal policies, and expectations adjustment, and the expected price increase range for this year is between 38% and 48%, and they have agreed with the agency's technicians. Even private consultants and scientific schools linked to Kirchnerism believe that the essence of long-term economic programs is inflation in nature, and they expect higher interest rates higher than the officially envisaged 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 the January data that the monthly inflation rate for the remaining 11 months of 2022 should not exceed 3.27% per month, to achieve this, the growth in monetary rules inflation (combined with international inflation) and new tariff policies lead to an increase in inflation.

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

Secretary Guzman repeatedly received consultations between lawmakers and senators between last Monday and yesterday for how much concerns the feasibility of the projected inflation that the programme 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 baskets of consumption,” Guzman said. “Over the past three weeks, the impact on food prices has been significant and obvious. What to do does not mean a situation where these shocks seriously recede,” Guzman continued.

Likewise, Chief of Staff Juan Manzour said that although the tools used by the government were those of private price transactions through trusts that subsidize local prices (such as oil), “there are other types of measures, such as the Ministry of Agriculture. It was necessary to take Julian Dominguez (see. The temporary closure of exports) 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 I thought everything was going well, everything became more complicated. When we think that the pandemic can make us develop freely, Argentina has 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 tremendous fight for food, and prices are flying around the world. “He added.

“The inflation war in Argentina started on Friday, hoping we could 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 Ministry of Economy's diagnosis, 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 for basic goods due to drought and conflict in Ukraine.” At the end of the last month of IPC 4 days ago.

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