Has inflation hit?

[MBerton416]

Your purchase power increased quite significantly, but it has not doubled.
There is still a basic inflation of ca 40-50% annually. Quick example: for a basket of 10’000 pesos you paid last Nov/Dec as you say CAD 200. The basket is now 8 months later 13’000 pesos. You pay now ca CAD 130. 1-(130/200) =35%. So your life is roughly one third cheaper now than last Nov/Dec.

By WU 200CAD is converting to 20,000

 

[Fiscal]

Argentina constantly implodes and then comes roaring back. Why will this recession be any different?

 

[sergio]

Argentina constantly implodes and then comes roaring back. Why will this recession be any different?

This crisis is global. Argentina was in a very weak position pre-Covid. The pandemic will not soon end. A vaccine may be no more than 50% effective with a lifespan of only a few months. There are various strains of the virus that will require different vaccines. It will take a lot of time to vaccinate people (this is assuming that it's a safe vaccine and there isn't resistance). No vaccine is going to be a panacea that allows people to throw off their masks overnight and go back to their old ways. If this or any government think the development of a vaccine will liberate the country and the economy overnight, they are mistaken. Argentina cannot wait that long.

 

[Alpinista]

By WU 200CAD is converting to 20,000

I understand. But to stay with example: you bought 8 months ago for 200 CAD 100 cans of beers for 100 pesos each (10000 pesos). Now because of the 50% inflation the price per can has now gone up in 8 months to 130. So even if you get now the double amount of pesos, in real terms you get for your 200 CAD not 200 cans of beer, but only ca 150. So part of your FX gains has been eaten away by the inflation.

 

[Alpinista]

Argentina constantly implodes and then comes roaring back. Why will this recession be any different?

What do you mean with roaring back? Argentina has gone over the last 100 years from one of the richest countries to a country with 40% living in poverty (likely to be 50 or even 60% within two years). Obviously there is always a bit of a rebound after every crisis, but the long term trend is clearly downwards.

 

[EL_TIGRE_de_Tigre]

What do you mean with roaring back? Argentina has gone over the last 100 years from one of the richest countries to a country with 40% living in poverty (likely to be 50 or even 60% within two years). Obviously there is always a bit of a rebound after every crisis, but the long term trend is clearly downwards.

Alipinista,

You are so on target. The trend is down with bounces higher, but all in all ... lower lows and lower highs. DOWN ...

I too am seeing that 50% to 60% number representing the percentage of the population below the poverty line. BUT - Here is an amazing thought:

Let's assume ... 50% of the population is below the poverty line ... One would have to guess that the next 25% (The portion right above the poverty line ...) are so dangerously close to it, that for all intents and purposes ... That place 75% of the population between a rock and a hard place.

In other words, 3/4 of all Argentines are going to be at the mercy of government assistance and intervention.

I submit this news story:

Government freezes TV, Internet and mobile phone prices until 2021

The government announced late Friday that is extending a price freeze for TV, Internet and mobile service until the end of the year, deeming them “essential public services.”

www.batimes.com.ar

A price freeze through the beginning of the year for cable, cell and internet services. This is an example of what I mean.

With price freezes, it is like holding a ball under water. Eventually, when the ball is released (The government steps aside and releases the price control / freeze.) the service provider adjusts pricing upward, in a very sharp manner virtually overnight. And many other sectors of the economy do more or less the same thing in unison. This has the effect of massive inflation.

The party is just getting started. There will be massive inflation in Argentina and the surrounding region. So much so, that the vast amount of people are going to afford nothing but the most basis of things. And they will not even be able to afford a satisfactory amount to satisfy their needs let alone wants.

As for discretionary items? Only the very highest part of society will be able to afford the. and as a result, there will not be enough economic activity to get the economy running again. This is going to be one very vicious cycle for at least 10 years perhaps 20 (A generation.) ...

So there you have it ... NO ROAR!

Just sinking with the trend.

 

[MBerton416]

I understand. But to stay with example: you bought 8 months ago for 200 CAD 100 cans of beers for 100 pesos each (10000 pesos). Now because of the 50% inflation the price per can has now gone up in 8 months to 130. So even if you get now the double amount of pesos, in real terms you get for your 200 CAD not 200 cans of beer, but only ca 150. So part of your FX gains has been eaten away by the inflation.

Ah okay... I see. I guess that goes back to my original question. Inflation is in full force!

 

[on the brink]

A month ago I bought an exercise bike for $54,999. It is now $59,999 - same vendor, same ML site. If my math is right, it went up 9.09% in a single month.

 

[Alpinista]

Ah okay... I see. I guess that goes back to my original question. Inflation is in full force!

Yes, it has always been around 50% over the last years. The big question is now whether the inflation is going through the roof (due to enormous deficit this years, they are printing money like crazy)