If you’ve recently discovered that your conveniently-priced and surprisingly delicious 10-peso empanada spot has increased its prices, you’re not alone. Argentine Government is yet again struggling to tame the steadily increasing rate of inflation.
Clarín’s Marcelo Bonelli reported that Argentina’s federal government can no longer substantiate the 17 percent benchmark rate of inflation currently used by the Central Bank — is, in fact, closer to 20 percent. While Mauricio Macri’s course changing presidency was won on promises of reducing inflation and stabilizing prices, economic consulting firms have found that his efforts have been largely unsuccessful.
The Government’s decision to work off of an inflation rate that is higher than the Central Bank’s, reflects a subtle political rift. Political columnists have speculated that the choice to quietly move on from the 17 percent rate used by the Central Bank was a “no hard feelings” move. Publicly announcing the change might discredit the current Chairman of the Central Bank of Argentina, Federico Sturzenegger.
During his time as Chairman, Sturzenegger has consistently shared Macri’s hope that the frightening rates of inflation will inevitably drop, resulting in the stabilization of prices. “We are absolutely convinced that in the second half we will have inflation rates that we have not seen for many years,” he said earlier this year. He referenced the growth of the middle-class job market and stabilized credit lines for Argentine citizens as indicators of auspicious times to come.
It’s no surprise that Argentina has a long history of high rates of inflation. From 1975 to 1990, the average annual rate of inflation reached an all-time high of 300 percent. Soon thereafter, the Argentine Government successfully curtailed skyrocketing inflations rates by pegging the peso to the United States dollar. These efforts proved helpful in the short-term, but could not sustain steady inflation rates.
Some Argentines worry Macri’s failure to disclose the Government’s new inflation rates may be the sign of decreased transparency. Federal prosecutors have recently brought charges against Macri’s family over a slew of conflicts of interest and questionable business ties. Meanwhile, Macri has made an effort to focus on the lack of accountability among Argentine corporations and has proposed a law that would make them legally responsible for corruption. “I want everything to be transparent and open, and for nobody to doubt the decision the president makes,” he said in an interview earlier this year.
Concerns over embellishments of the rate of inflation have been compounded by a historic lack of trust in Argentine institutions and politicians. Indec, the government institute of statistics and census of Argentina tasked with publicizing rates inflation, was widely accused of releasing deliberately inaccurate data under the former president Cristina Fernández de Kirchner administration. The International Monetary Fund has since acknowledged Argentina’s efforts to increase transparency between politicians and the general public.
Indec and the Central Bank target a return to an inflation rate between 12 and 17 percent by year’s end.