Hyperinflation ante portas

[Alpinista]

Before the PASO the peso was around 45. Now mid October it is 167. On an annualized basis this is a devaluation of more than 200%. And imposing price controls on basic goods only has limited effect. Now it seems that prices seem to increase much than in previous months, affecting - as always - the poor disproportionally:

Aumenta 10% el pan y se dispara la inflación de alimentos

Aunque el índice de precios que se conocerá mañana rondará 3%, la suba de alimentos sería mayor al promedio general. El pan tendrá un alza del 10%. Se profundizó el impacto en los hogares más pobres

www.infobae.com

With the Central Bank running out of USD reserves, surely also the import goods will soon change from the official to the market value.
The other day Guzman was forecasting an inflation of 29% for 2021:

Martín Guzmán presentó el Presupuesto 2021: inflación de 29%, dólar a 102,4 pesos y un crecimiento de 5,5 por ciento

El ministro de Economía dio los detalles de la ley de leyes que establece los gastos y recursos para el año próximo

www.infobae.com

The only way that this is not spiralling out of control in the short term is a white knight (IMF, China, ... ?)

 

[antipodean]

Not sure that I buy into the speech about inflation hurting the ”poor” disproportionately. I feel it is scaremongering to win votes by telling people whose situation is already bad that it is somehow worse than before to get them up in arms.

Let’s face it, the overwhelming majority of poorest people in this country have always been poor (or have been for decades) They were born in villas or humble abodes and they die there. During that time they have always known hunger and soup kitchens, unemployment and the inability to make ends meet. Likewise during that time they have always known assistance from the state - which let’s face it is never enough to have a dignified life or they wouldn’t be forced out to cartonear or sell socks in the park or even work in precarious Unofficial jobs to supplement their incomes.

It’s not like they moved to Recoletta then inflation struck so they went back to the Villa.

IMO The people that it hurts the most are actually those with regular jobs who have known better times and have debts / fixed cost obligations to honor. These are the people more likely to “punish” the politicians with their vote. But with only 5 million registered, tax paying private sector employees in this country... doesn’t mean much.

 

[Alpinista]

Not sure that I buy into the speech about inflation hurting the ”poor” disproportionately. I feel it is scaremongering to win votes by telling people whose situation is already bad that it is somehow worse than before to get them up in arms.

Let’s face it, the overwhelming majority of poorest people in this country have always been poor (or have been for decades) They were born in villas or humble abodes and they die there. During that time they have always known hunger and soup kitchens, unemployment and the inability to make ends meet. Likewise during that time they have always known assistance from the state - which let’s face it is never enough to have a dignified life or they wouldn’t be forced out to cartonear or sell socks in the park or even work in precarious Unofficial jobs to supplement their incomes.

It’s not like they moved to Recoletta then inflation struck so they went back to the Villa.

IMO The people that it hurts the most are actually those with regular jobs who have known better times and have debts / fixed cost obligations to honor. These are the people more likely to “punish” the politicians with their vote. But with only 5 million registered, tax paying private sector employees in this country... doesn’t mean much.

I agree the that the "poorest are hit hardest" is to some degree a worn-out phrase.
However .... if you look at the stats, the % of the people defined as poor has increased from 33% in Q1 2020 to 46% in Q2 2020 (so the recently published H1 2020 Average of 40.9% is statistically correct, but doesn't reveal the trend in the first half of this year). So it is not that there is a stable population which is (and always has been) "poor". Especially now I expect to increase even more the "poor" to at least 60%, if not 70%. And I believe the ones who were dropping below the line this year were not really the workforce "en blanco", but the ones operating in the unofficial sector who lost the job from one day to another in April / May when the quarantine started.

 

[Rich One]

Many economists and aficionados announce the perils of Hyperinflation soon Alfonsin style . Which forced Alfonsin to leave the Casa Rosada earlier..! The poor receiving Plans are the electoral base of the Populista governments

Will it happen this year ?

 

[antipodean]

I agree the that the "poorest are hit hardest" is to some degree a worn-out phrase.
However .... if you look at the stats, the % of the people defined as poor has increased from 33% in Q1 2020 to 46% in Q2 2020 (so the recently published H1 2020 Average of 40.9% is statistically correct, but doesn't reveal the trend in the first half of this year). So it is not that there is a stable population which is (and always has been) "poor". Especially now I expect to increase even more the "poor" to at least 60%, if not 70%. And I believe the ones who were dropping below the line this year were not really the workforce "en blanco", but the ones operating in the unofficial sector who lost the job from one day to another in April / May when the quarantine started.

Agree there are a lot of “vulnerable” people in this country. Many domestic workers for example who work in black claim both ANSES benefits and their wages - yet they are still poor with either or all of the above, just they manage to keep themselves out of the “poverty” statistics. It’s rare that they will ever work their way out of this precariousness and move into the middle class.
Regardless of this group of vulnerables (10-20%?) at least 25-30% of the population is always considered as living in poverty over the last couple of decades - showing there is indeed a “core poor” population. And we know how these people usually vote yet life doesn’t get better and stay better for any of them regardless of which way they do vote.

 

[antipodean]

Many economists and aficionados announce the perils of Hyperinflation soon Alfonsin style . Which forced Alfonsin to leave the Casa Rosada earlier..! The poor receiving Plans are the electoral base of the Populista governments

Will it happen this year ?

My take is that a LOT of people AND businesses depend on government subsidies and price/ cost freezes (including mine!) at the moment. If political instability would threaten these subsidies I would be more included to “grin and bare it” until a more convenient time.
Not to mention the significant number of government employers still earning 100% of their salaries who could come in the firing line if the country needed genuine solidarity measures to get through the bankruptcy may also prefer to grin and bare it.

With COVID, restrictions and subsidies, frankly speaking they have us by the balls for as long as this mess drags out.
Hence I feel and perceive that people are being more tolerant than they would normally be.

 

[Rich One]

My take is that a LOT of people AND businesses depend on government subsidies and price/ cost freezes (including mine!) at the moment. If political instability would threaten these subsidies I would be more included to “grin and bare it” until a more convenient time.
Not to mention the significant number of government employers still earning 100% of their salaries who could come in the firing line if the country needed genuine solidarity measures to get through the bankruptcy may also prefer to grin and bare it.

With COVID, restrictions and subsidies, frankly speaking they have us by the balls for as long as this mess drags out.
Hence I feel and perceive that people are being more tolerant than they would normally be.

Now that you mentioned it Congressmen earning 100 % of their salaries, PLUS all the perks such as: air/road travel expenses , car expenses , and location pluses . While they have been sitting home for 7 months...! mentioned at Intratables ..!

What lies ahead according to Kristalina with the IMF “Argentina faces very dramatic challenges without easy solutions, a deep recession, social conditions worsening, economic imbalances growing and also the divorce between the official exchange rate and the parallel (shadow) expanding ”. Well what else can go wrong..?

 

[Alpinista]

Whereas Alberto F and Guzman are repeating “no hay devaluación”, the market doesn’t seem to put much trust into these words.

Today the blue closed at 178, and no end in sight. Apparently some companies already stopped selling because they simply dont have a reference anymore (they simply dont know whether and at which rate they can import next week).

The exporters obviously dont sell because the gap between the official and the blue is now around 130%, and they know exactly that this is not viable.

Now with this gap it is interesting again for credit card halders to spend again in usd (instead of the 30 + 35% taxes). The same for the 200 usd monthly allocations.

In the meanwhile, the usd savers are running to the bank to empty their savings accounts. And the central bank already operating without reserves.

As this is not a linear development, i do expect that this system will crash within days or weeks. And once the devaluation is reality, then it will become really interesting.

 

[gracielle]

Con dólar blue récord, empresas guardan stock y los argentinos ya empiezan a sufrir el efecto del desabastecimiento

Sin certeza de cuál será el precio de reposición, los empresarios tienden a acumular stock mientras la demanda del público aumenta. Ya se notan faltantes

www.iprofesional.com

16 October 2020
With a record blue dollar, companies keep stock and Argentines are already beginning to suffer the effect of the shortage

Con dólar blue récord, empresas guardan stock y los argentinos ya empiezan a sufrir el efecto del desabastecimiento

Sin certeza de cuál será el precio de reposición, los empresarios tienden a acumular stock mientras la demanda del público aumenta. Ya se notan faltantes

translate.google.com

 

[Mira Vos!]

I’ve seen mostly predictions that inflation will continue in Argentina. Have there been any predictions for 2022-2024? Would love to plan my next year in Argentina but since I don’t leave until July I have no idea what it will be like then.