The inflations factor

[tomdesigns]

I have been watching the inflation for about 2 years now here is my take on it.

After the Global Financial Crisis the pesos started trading at around 3.8 pesos per dollar.. this change came about very quickly. Previously pesos were trading around 2.9 to to the dollar.

We basically saw about a 25% decrease in the value of pesos to dollors..

I believe the pesos and prices in Arg are really all pegged to the dollar. When the pesos dropped in value business needed to adjust prices to adapt to the new trading value of the pesos. Wham we have what seemed like hyper inflation. At the same time mix in regular inflation and prices in pesos really started jumping.

I am hoping we will see a leveling out now but only time will tell.

 

[sesamosinsal]

Who knows what's really causing inflation. In theory, it's too much money changing too few products. But these days, I think it has more to do with people predicting inflation than anything else. When the unions and companies are predicting 25% increases every year (so called "built-in inflation"), that will only lead to a vicious cycle of price increases and wage increases. It can't go on forever.

 

[gouchobob]

Look up in the dictionary for what causes inflation. The standard accepted reason is that inflation results when the money supply grows faster than the underlying growth in the economy. Right now the government is growing the money supply around 28% per year, which is highly inflationary. As long as these policies continue the inflation will almost certainly continue.

 

[John.St]

I have been watching the inflation for about 2 years now here is my take on it.

After the Global Financial Crisis the pesos started trading at around 3.8 pesos per dollar.. this change came about very quickly. Previously pesos were trading around 2.9 to to the dollar.

We basically saw about a 25% decrease in the value of pesos to dollors..

I believe the pesos and prices in Arg are really all pegged to the dollar. When the pesos dropped in value business needed to adjust prices to adapt to the new trading value of the pesos. Wham we have what seemed like hyper inflation. At the same time mix in regular inflation and prices in pesos really started jumping.

I am hoping we will see a leveling out now but only time will tell.

The AR$ follows the U$S more or less, with a downwards slide in comparison to the exchange rate.

Compare these two graphs:

U$S http://www.valutakurser.dk/currency/...alutaid=233053
AR$ http://www.valutakurser.dk/currency/...alutaid=287417

for both select dates (dd/mm/yyyy) e.g. 02/04/2007 and 02/04/2011

Yr. US$/AR$
2008
07 3.01
08 3.03
09 2.98
10 3.15
11 3.34
12 3.06
2009
01 3.49
02 3.46
03 3.50
04 3.70
05 3.68
06 3.72
07 3.78
08 3.82
09 3.82
10 3.85
11 3.76
12 3.80
2010
01 3.79
02 3.82
03 3.85
04 3.87
05 3.88
06 3.92
07 3.94
08 3.95
09 3.96
10 3.97
11 3.98
12 3.98
2011
01 3.99

 

[Irishdave]

I have been here 4 years and there has been constant inflation since I arrived. I would say the price of living is 3 times what it was 4 years ago which doesnt go along with the initial post. I dont think it has anything to do with dollar but that is used as an excuse to justify high inflation and I think price rises this year were as agressive as anything I have seen since I came here and that does not concur with toms statement.I think inflation is closer to 35% per year.

 

[tanvimil]

Great, another inflation thread. Just what we need.

 

[tomdesigns]

Hmmm the increases in the money supply might explain the the pesos to dollar issue. In Corrientes actually the prices of things are still pretty low if you translate to dollars.. Not all things but allot of things. If you compare directly against costs in the US and shop in the right places. Then again street side shops without buildings run by families do not have the overhead etc.

I can still buy a pound of potatoes for around 30 cents.. a loaf of bread for around 40 cents US.. Meat is still cheaper here.. I can buy tenderslion beef that if off the charts good for around $5 a pound.. Wine ohhh yeah $10 for an incredibly mind blowing good bottle of wine. But I am in Corrientes not BA AS!

 

[John.St]

I have been here 4 years and there has been constant inflation since I arrived. I would say the price of living is 3 times what it was 4 years ago which doesnt go along with the initial post. I dont think it has anything to do with dollar but that is used as an excuse to justify high inflation and I think price rises this year were as agressive as anything I have seen since I came here and that does not concur with toms statement.I think inflation is closer to 35% per year.

Measured in Euros the price of living in Argentina has increased by 53-55-56 percent from March 2009 to May 2011 (it reached that level in January 2011 and has been stable since then caused by the growing exchange rate for Euros); Argentino inflation measured in U$S has been higher.

The inflation measured in pesos using two different methods, one of which is the 'Canasta Basica' (which is what an Argentino lower middle class/"affluent" working class family is assumed to need), has grown by 24.1% (canasta) and 26.9% (middle class): http://www.inflacionverdadera.com/