President Alberto Fernández used a href="https://www.infobae.com/politica/2022/03/15/antes-de-la-difusion-del-indice-de-precios-alberto-fernandez-prometio-el-viernes-empieza-la-guerra-contra-la-inflacion/" rel="noopener noreferrer" target="_blank"war metaphors to mark the beginning of a “war”, referring to/a prices. The anti-inflation policy has continued since next Friday after 4.7%, which recorded a a href="https://www.infobae.com/economia/2022/03/15/la-inflacion-de-febrero-fue-47-y-acumulo-523-en-los-ultimos-doce-meses/" rel="noopener noreferrer" target="_blank"higher-than-expected inflation index in February/a. In the same tone as the President's speech, the government has a limited army of measures and regulations to deal with inflation rates. From light contracts, such as various types of contracts with entrepreneurs, to stricter contracts, such as the possibility of increasing export duties on certain agricultural products, to other “technical” contracts that are part of the agreement with the IMF, such as the rise in peso rates.
The economics team is still trying to measure the impact of international price shocks on food and energy, suggesting that it immediately affects domestic values. The first victims were foods derived from wheat and corn, which, according to official diagnoses, experienced a remarkable increase just as the war in Ukraine began in the last three weeks. At the end of the year, a shock wave would occur due to rising costs of imported gas during the most demanded months in winter.
At the international level, this disruptive scenario calls into question some of the statements already recorded in the memorandum of understanding with the IMF. This statement will be discussed by the Senate in the future and will be approved by the MMF Council after a few hours of debt due next Monday. The main variable targeted is inflation forecasts of 38 to 48% this year, which is well below the expectations of the private sector and analysts close to the government coalition. According to individual analysts, annual inflation in the first two months (8.8%) will mean that the price increase per case will be well over 60%.
The reading that, starting next Friday, the president's expression of “war” against inflation is taking risks in official offices that are not related to economic governance, is related to the fact that parliamentary business has ended in the Senate. The agreement with the IMF, which began as a private bond holder in February 2020, will lead to a page change, already with the economic roadmap for the next few years, a long chapter in the global renegotiation of dollar debt by the Frente de Todos government.
An official recalled a similar metaphor used 30 years ago by bAdolfo Canitrot, Deputy Minister of Economy, Raúl Alfonsín, in the afternoon. “Alberto is not a poet, but a lawyer.” They ironically commented on the president's mention of the war in the office.
The truth is that several previous battles against inflation have already failed, such as some price freeze programs that have proven ineffective in suppressing gondola escalation over the two years and months of the FrontToDist order. The order was changed by the Ministry of Internal Trade because it failed to establish a concrete price dam. The last solution sought by the government was a special trust agreed between exporters and supermarkets that subsidized the local price of certain products such as oil. The objective of these measures was international value and national value. It's about “separating” values.
This is the “favorite” measure of economic management at the moment to carry out the fight against inflation according to the reading of the Ministry of Economy, but they say that the situation caused by the war conflict in Eastern Europe changes the scenario and forces us to make decisions of a different type. The contrast is clear. A few weeks ago, when the war had not yet broken out in Ukraine, senior officials of the economic team categorically ruled out not touching export tariffs.
Negotiations will take place between the Ministry of Internal Trade and the mass consumer company in the coming weeks. At the beginning of April, it is necessary to renew the Care Price Program, which includes a large basket of food and drinks. Negotiations will begin over the next few weeks to determine the growth rate of 1,300 products. In January, the adjustment was 2%.
The agreement with the IMF includes “dynastic” views such as methods of fighting inflation, the lack of dollars, monetary and fiscal policies and the adjustment of expectations, the range of price increases expected for this year is between 38% and 48%, in agreement with the agency's technicians. Even private consultants and research schools linked to Kirchnerism believe that the essence of a sustainable economic program is inflationary in nature and expects a higher interest rate than officially expected.
The government and the Monetary Fund are also projecting that the inflation horizon will fall below 30% by 2024, according to a memorandum of understanding sent by the administration to Congress.
The Proyecto Economico Research Center, owned by former Deputy Director bFernanda Vallejos, said: “To achieve this goal, given the January data, the monthly inflation rate for the remaining 11 months of 2022 is not expected to exceed 3.27 percent per month. However, the increase in exchange rate rule inflation (combined with international inflation) and the new tariff policy have led to an increase in inflation rates.
“Inflation targets are also becoming obsolete after the impact of international prices,” said Lorena Giorgio, chief economist at the consulting firm Equilibra . I think so. This year, inflation is at least 60%. If you look at this year's figures and the first forecast for February, there is no tariff adjustment or the acceleration of the creeping ankle is about 4% higher. This is the monthly inflation floor for the rest of the year.” He said so.
Secretary Guzman has repeatedly received consultations from legislators and senators between last Monday and yesterday on the feasibility of inflation stipulated in the program with the IMF. The official said, “Expected inflation is that's it,” but it opened a window into the possibility that the international price shock caused by the war in Ukraine would include scenarios beyond expectations, especially in terms of spending on energy revenues.
“The war between Russia and Ukraine is taking place in Argentina, and today it shows on the prices paid for everything related to goods, such as products that consume wheat, eggs, milk, oil, consumer baskets,” Guzmán told the Senate. and obvious over the last three weeks. Doing nothing means a situation where these shocks are regressing profoundly,” Guzmán continued.
In the same vein, Chief of Staff Juan Manzur said that although the tools used by the government were tools of private price agreements through trusts that subsidize local prices (for example, oil), “there are other types of measures, such as ministerial agriculture, have had to take Julián Dominguez (see Temporary export closure), included in the framework of absolute exceptions,” said the Prime Minister due to the war in Ukraine.
This Tuesday, Alberto Fernández spoke more directly about the price situation: “Every time we believe that things are in order, everything gets complicated. When we think that the pandemic can allow us to develop freely, there is also a war in Argentina, which takes the form of Europe and economic complications that affect the whole world.” The president said. “The biggest complication is that the war triggered a fierce fight for food and that prices are skyrocketing around the world. He added.
“I promise that the war on inflation in Argentina will start on Friday, in the hope that we can solve the debt problem this week. We are going to put an end to speculators and put things in order,” he said.
Inflation in February stood at 4.7%, accumulating 52.3% last year with a higher-than-expected monthly interest rate. According to a diagnosis by the Ministry of Economy, the prices showed the immediate impact of the war conflict in Eastern Europe. “This indicator was affected by the impact of rising international prices for major commodities due to droughts and conflicts in Ukraine,” the Ministry of Finance said. However, the invasion of Russia began on February 24, four days before the end of the last month of the CPI.
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