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Inflation in Argentina: an analysis of the economic and political context

Argentina is currently undergoing a period of profound economic turbulence, as highlighted by recent inflation data. The country’s financial landscape is showing signs of increasing instability, with inflation rates reaching alarming levels.

This past August, inflation recorded a rate of 12.4%, a figure not seen since 1991. Considering the entire year, the annual inflation rate has reached an astounding 124%. What’s even more surprising is that the Central Bank of Argentina had forecasted an inflation rate of just 11.74% for August. Current estimates suggest it could hit 12% in September and drop to 9.1% by October. But the most thought-provoking figure is the projection that annual inflation could reach 169.3% by the end of the year.

Faced with such numbers, a spontaneous question arises: why isn’t the central bank taking action by adjusting interest rates? Internal information suggests that the interest rate will remain steady at 118%. The reason behind this decision seems to lie in the political implications that a hike might entail.

On the political front, Argentina has witnessed significant developments. Following the presidential primaries in August, the ultra-libertarian candidate, Javier Milei, secured 30% of the total votes. This outcome led Argentina to raise its interest rate from 97% to 118%. Milei, currently leading the race for the presidency scheduled for October 22nd, is competing against the current Minister of Economy, Sergio Massa, and the opposition candidate, Patricia Bullrich, former Minister of Security in Argentina.

In conclusion, Argentina is currently caught in a perfect storm of economic challenges and political tensions. The upcoming months will be pivotal in determining the country’s economic and political future.


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