Argentina, Prices Soar 102% in One Year... "Side Effects of Excessive Money Printing"

[Image source=Reuters Yonhap News]

Amid Argentina's inflation rate setting new records every month, the consumer price inflation rate surpassed 100% last month.

According to major foreign media including Bloomberg on the 15th (local time), Argentina's National Institute of Statistics and Census (INDEC) announced that the consumer price inflation rate for February recorded 102.5% compared to the same month last year. This is the first time in 32 years since 1991 that Argentina's inflation rate has exceeded 100%. Compared to the previous month, it rose by 6.6%, surpassing the Argentine government's monthly target forecast of 5%. Currently, the only countries with higher inflation rates than Argentina are Lebanon, Venezuela, Syria, and Zimbabwe.

The surge in Argentina's inflation is analyzed to be due to the central bank's excessive monetary easing policy amid skyrocketing raw material prices caused by Russia's invasion of Ukraine. According to the Central Bank of Argentina (BCRA), the money supply in circulation during President Alberto Fernandez's three years in office has increased about fourfold compared to before. Moreover, the situation has worsened as droughts have reduced crop production.

As the inflationary trend continued daily, the Fernandez administration announced a price stabilization measure called "Fair Price" in November last year. It included freezing the prices of about 1,823 basic daily necessities until February 28 of this year.

However, considering Argentina's extreme economic volatility, such measures alone are insufficient to calm inflation. Argentina has suffered chronic fiscal deficits, experiencing nine national defaults over 40 years since the debt crisis hit South America in the 1980s and receiving bailout funds from the International Monetary Fund (IMF) 20 times.

Major foreign media explained, "The Argentine government implemented similar inflation control policies in 2021 but failed to curb soaring prices," adding, "Economists remain skeptical of the government's measures and expect severe inflation to continue this year."

In response, the IMF urged the Argentine government to strengthen inflation stabilization measures to continue operating the $44 billion bailout program signed last year. Major foreign media reported, "Argentina is expected to receive about $5.3 billion from the IMF this month," and added, "During the process of applying for the bailout program last year, Argentina even lobbied to lower the targets set by the IMF regarding economic stabilization."

This content was produced with the assistance of AI translation services.