Rising Argentine inflation ends 2021 over 50%

Argentine inflation continued to rise in 2021, ending the year at more than 50 percent, the state statistics institute said on Thursday,

It was grim news for the South American country, given cumulative inflation in 2020 — a year when the economy was almost paralyzed by the Covid-19 pandemic — was just 36 percent.

The largest price increases in 2021 were in hotels and restaurants (65.4 percent), transport (57.6) and food (50.3).

“During 2021, the government tried to anchor inflation and to do so basically used the regulation of the price of utility rates and the exchange rate,” Hernan Fletcher of the Argentine Center of Economic Policy, told AFP.

“Although it certainly was not a success, without this, inflation would have been higher.”

Since 2019, Argentina has imposed ever stricter currency exchange controls, meaning citizens can only withdraw $200 a month at the official rate.

For 2022, the government predicted in its budget — which was rejected by the opposition-dominated parliament — an inflation of 33 percent.

Opposition figures derided the budget as unrealistic.

According to a Central Bank survey, inflation in 2022 will be 55 percent.

The news comes with the government embroiled in a tricky renegotiation with the International Monetary Fund (IMF) over the repayment structure of a $44 billion loan agreed in 2018.

Argentina is due to pay back $19 billion to the IMF this year, another $20 billion in 2023 and $4 billion the following year.

Yet analysts estimate that the country has just $4 billion in international reserves.

“A deal with the IMF could improve the economy in terms of expectations, but in terms of inflation I don’t see 2022 being very different to 2021,” said economist Pablo Tigani.