The fact that December’s inflation was the highest since June 2016, and that the annual rate clocked in eight points above the Macri administration’s most pessimistic estimate at the beginning of the year – the Central Bank intended to keep it between 12 and 17 percent – have yet again thrown the debate about how to tackle price increases to the forefront of the conversation.
Head of the Argentine statistics agency INDEC Jorge Todesca was not exempted from this discussion and gave his opinion about it in an interview with Radio Mitre. While he conceded this year’s figures were high, he highlighted his belief that the government acknowledges them as a problem and has every intention to lower them by implementing policies to achieve this goal.
“There is an economic policy aimed at having the lowest inflation possible, but at the same time, there’s a group of measures aimed at stabilizing the economy and the fiscal sector, which drives inflation up. It would be easier to lower inflation with austerity measures and sacrificing [economic] growth, but that’s not the government’s approach,” he said.
Todesca went on to say that “these levels of inflation are chronic, it takes a lot of time and effort to reduce them.” “At the beginning, the exchange rate had to be dealt with, and in the second year [there was] the problem regarding the price of utilities, which is tied to fiscal deficit,” he added.
The above graph (previously published by The Bubble here) shows the cumulative inflation rates since the beginning of the year, differentiating between the average rate as well as goods, services and core inflation rates. Services lead the way in terms of price increases with both goods and core inflation below the average rate. While the inflation rate for services was consistently high, the government might be encouraged by the fact that core inflation did not increase to the same extent. Core inflation reflects the long-term trend in inflation rates.
In comparison to December 2016, December 2017 showed utilities with a 55 percent increase. Over the same period, food increased by 20 percent, clothing 16 percent and transport 20 percent.
However, the inflation rate varied depending on the country’s region. Each one had its own increases or implemented national increases to different extents. The Cuyo region (Mendoza, San Juan and San Luis) had the highest rate, with 25.5 percent, 0.7 more than the national average. In contrast, the Northeastern region had the lowest, with 22.3 percent. The city and province of Buenos Aires, on their end, had a rate of 25 percent, almost in line with the national average.