(Bloomberg) — Argentine inflation soared above 160% in November ahead of President Javier Milei’s major currency devaluation, which is expected to drive price increases further this month.
Consumer costs rose 12. 8% in November from last month, above the median estimate of 11. 4% from economists polled via Bloomberg. A year ago, inflation reached 160. 9%, the highest point since the early 1990s, when Argentina was emerging from hyperinflation.
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That figure has already been surpassed, as Milei won the presidential runoff against former Economy Minister Sergio Massa on Nov. 19, marking the end of the price freeze on many products that were expiring after the election and a first currency devaluation of 54. percent. This is expected to cause values to skyrocket.
The first days of December have already seen price increases of 15% compared with a month earlier, and may end the month up around 20%, according to consulting firm C&T Asesores. Inflation is the result of “a general coming clean on prices,” including gasoline, according to economist Maria Castiglioni, the firm’s director. JPMorgan Chase & Co. forecasts an accumulated rise in prices of 60% in December and January, according to a recent note.
Food and beverages led all price increases in November, followed by clothing and living expenses.
In addition to the devaluation, Milei’s Economy Minister Luis Caputo on Tuesday announced a package of measures aimed at cutting spending by the equivalent of 2. 9% of gross domestic product to balance the budget next year, adding key subsidies to energy and transport. The new government acknowledges that these measures will have a recessive effect, but promises that they will be the last hard pill that Argentines will have to swallow in the face of the previous government’s economic mismanagement.
Milei prepared Argentines for the hard times ahead in a somber speech when he was sworn in on Sunday, continually repeating that “there is no money,” a word that resonated through Caputo in his recorded announcements on Tuesday. Milei warned that if drastic measures are not taken now, Argentina could see annual inflation reach 15,000%.
On Wednesday, the central bank kept the benchmark Leliq rate at 133%, while lowering the overnight repo interest rate from 126% to 100%.
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