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Even for a country in which inflation is considered almost a tradition, the increase registered in 2018 exceeded the expectations
"Inflation is the demonstration of your inability to govern," said Macri in 2014, a year before his successful presidential campaign that would see him take the Casa Rosada. "In my presidency, inflation will not be an issue, it will not be a challenge," he said in the same interview, but during 2018 inflation in Argentina reached 47.6%, its highest point in 27 years.
At the beginning of last year, the inflation goal of the Macri government was to fall to 15%, about 10 points below where it was at the time. Things did not happen that way, the monthly inflation increase was on average 6.5%, marking one of the hardest years for the pocket of the average Argentine.
The increase in the prices of goods exceeded 50% and in the case of services reached 42.8%. Besides being the reflection of the failure to put order to the fiscal situation of the country, the uncontrolled increase in prices also comes because of mishandling the exchange rate. Ultimately, these two failures of Mauricio Macri's administration devastated the purchasing power of the population of a country already used to coexisting with high inflation figures.
Among the worst in the world and history
Argentina's performance in 2018 regarding inflation places it in fifth place worldwide. First of all, there is Venezuela, which although it does not have official figures known to the public, according to the opposition reached 1,698,000% during 2018.
South Sudan is in the second place, which registered inflation of 99.4%, followed by Sudan with 64.3%. These are followed by Iran, whose figure was 47.8%, and right after we find Argentina.
But it has not been just this year. Argentina's struggle with inflation is historic. During the last 70 years of history, in 54 have had inflation figures above 10%. In contrast, Mexico has not had a single year with more than 10% since 1999, Colombia since 1998 and Chile since 1993.
In the decade between 2007 and 2017, Argentina has only had inflation figures below 20% on one occasion, in 2009. According to the economist Nicolás Cachanosky, the Argentine Central Bank, in its 78 years of history between 1935 and 2013, managed an annual average of 53.8% inflation.
Even with Argentina's worrying inflationary record, that of 2018, the figure of 47.6% of inflation, still stands out among all the others. Since 1991, you did not see something like that.
An encouraging start to the year with a new budget
Despite the devastating performance during 2018, the year 2019 seems to have started correctly for Argentina. Although inflation did not fall, its growth seems to have slowed during the first month of the year, which seems to register a figure of 2.5% growth.
Macri's plan is to continue attacking inflationary pressure, and his primary tool to do so during this, his last year in power, will be the state budget that has already been approved.
According to the Argentine president, the 2019 budget "ends up spending more than we have because that does not contribute, the only thing it generates is to bring more inflation and debt."
Some of the goals of the budget for 2019, whose primary objective is to reduce spending to balance the state's finances, are:
The fulfillment of the "zero deficit" in the primary sector, that is, collect in taxes the same as the government spends.
Put a limit to the recession in a decrease of only 0.5% in economic activity during 2019. The decrease during 2018 was 2.4%.
Revalue the peso against the dollar, which reaches 40.1 pesos average during 2019.
Reduce inflation to achieve a figure of 23% towards the end of 2019.
LatinAmerican Post | Pedro Bernal
Translated from "La inflación en Argentina alcanzó un pico histórica"