Argentina August inflation forecast at highest since 1991

12:27 pm Monday, September 11th, 2023

By Hernan Nessi

BUENOS AIRES (Reuters) – Argentina’s Consumer Price Index (CPI) likely rose 11.8% in August, which would be the highest monthly figure since 1991, according to a Reuters poll of analysts on Monday, after a sharp devaluation of the local peso currency last month.

The country’s government devalued the currency by nearly 20% in mid-August after radical libertarian Javier Milei, who wants to axe the central bank and dollarize the economy, won a shock 30% of the vote in the country’s open primary election.

Argentina was already battling annual inflation near 115%, which is driving a painful cost of living crisis and pushing people into poverty. The crisis is also shaking up the political arena ahead of general elections in October.

“August was the worst month, I would say in the last 25 years of Argentina’s economy,” Sergio Massa, Minister of Economy and presidential candidate for the ruling Peronist bloc, said in a recent television interview.

“It will be noticeable in the inflation number.”

The survey of 28 analysts polled by Reuters forecast monthly inflation for August ranging from 9.3% to a maximum 12.9%. Argentina’s National Institute of Statistics and Censuses (INDEC) is scheduled to publish the official data on Wednesday.

C&T Economic Advisors, which projects an 11% monthly advance for August, said it would likely beat a peak of 10.4% in April 2002 during a major economic crisis and equal that of March 1991 before the country imposed a currency peg.

Prices had already been accelerating since the second half of July but the jump in all exchange rates on Aug. 14 further changed the situation, the consultancy said in a report.

Analysts also predicted inflation would likely remain in double figures for September.

“The increase registered in the CPI during August will generate a carry-over effect,” said Eugenio Mari, Chief Economist at the Libertad y Progreso Foundation.

(Reporting by Hernan Nessi; Writing by Valentine Hilaire; Editing by Josie Kao)