“War” on inflation: without planning, the government analyzes isolated measures to prevent price spikes

President Alberto Fernández used a military metaphor to mark the beginning of a “war”, referring to pricing. The policy of combating inflation will continue after 4.7% starting next Friday. February recorded a higher inflation index than expected. In the same tone as the President's speech, the government has a limited army of measures and regulations to combat inflation. Light, such as various types of agreements with entrepreneurs, is the possibility of increasing export duties on some agricultural products, other “technologies”, which are part of an agreement with the IMF (for example, raising peso interest rates).

Economic teams are still trying to measure the impact of international price shocks on food and energy, assuming they have an immediate impact on internal values. The first victim was a product derived from wheat and corn, which, according to an official diagnosis, showed significant growth at the same time. The war began in Ukraine in the last three weeks. At the end of the year, a shock wave will occur due to the increase in the cost of imported gas in the most demanding months in winter.

Internationally, this disruptive scenario questions some statements already recorded in a Memorandum of Understanding with the IMF, which will be discussed in the Senate in the future and will be approved by the Fund Council after several hours of debt due to next Monday. The target target inflation forecast was 38-48% this year, which is well below the expectations and analysis deadlines of the private sector. According to some analysts, annual inflation (8.8%) in the first two months means that the increase in the price of cases will be much higher than 60%.

Starting next Friday, the president's expression of “war” on the risk of inflation in official offices not related to economic governance is due to the fact that the parliamentary proceedings ended in the Senate. The agreement with the IMF, which began in February 2020 as a private equity holder, will lead to a page change, already in the coming years, along with the economic roadmap, a long chapter in global debt negotiations on dollar debt by the Government of Frante de Todos.

One official recalled a similar metaphor used in the afternoon by Adolfo Canitrot, Deputy Minister of Economy of Raúl Alfonsin 30 years ago. They ironically commented on the president's mention of the war in the office.

The truth is that there have already been several battles against failed inflation. For example, during the two years and months of the FrontTodist order, some price freeze programs that were not effective in curbing gondola rise. Due to the inability to establish a specific price dam, the order was changed by the Ministry of Internal Trade. The last alternative sought by the government was through a special trust agreed between an exporter and a supermarket that subsidized the local price of certain products, such as oil. The purpose of these events was international and internal values.The purpose of such events was to “separate” values.

This is the “favorite” measure of current economic management to combat inflation in the Ministry of Economy reading, but it is said that the situation caused by the military conflict in Eastern Europe changes the scenario and forces us to make a different kind of decision. The contrast is clear. A few weeks ago, when the war had not yet erupted in Ukraine, senior officials of the economic team categorically ruled out not touching export tariffs.

In the coming weeks, negotiations between the Ministry of Internal Trade and mass consumer enterprises will be held. In early April, it is necessary to restore the care price program, which includes a large basket of food and drinks. In the coming weeks, negotiations will begin to determine the growth rate of 1300 products, and the adjustment in January was 2%.

The agreement with the IMF includes “dynastic” views, such as how to combat inflation, no dollar, monetary and fiscal policies, and adjustment of expectations, and the expected price increase range for this year is between 38% and 48%, and they have agreed with the agency's technicians. Even private consultants and scientific schools related to Kirchnerism believe that the essence of long-term economic programs is inflation in nature and expects higher interest rates than officially anticipated issues.

According to a memorandum of understanding sent by the administration to Congress, the government and the Monetary Fund expect the inflation horizon to rise below 30% by 2024.

The Proyecto Economico Research Center, owned by former deputy director Fernanda Vallejos, said: “In view of January data that the monthly inflation rate for the remaining 11 months of 2022 should not exceed 3.27% per month, to achieve this goal, the growth of monetary rules inflation (combined with international inflation) and new tariff policies lead to an increase in inflation.

Chief Economist Consultant Lorena Giorgio said: “Even after inflation targets are exposed to international prices, there is a firm equilibrium. If you look at this year's figures and the first forecast for February, there is no tariff adjustment or the acceleration of the pegs that have entered is about 4% higher, which is the floor of the monthly inflation for the rest of the year,” he said.

Secretary Guzman has repeatedly received consultations between lawmakers and senators between last Monday and yesterday regarding the feasibility of the projected inflation that the program provided with the IMF. The official said, “Expected Inflation is all”, but it opened a window into the possibility that international price shocks caused by the war in Ukraine will include scenarios that exceed expectations, especially in terms of energy costs.

“The war between Russia and Ukraine is taking place in Argentina, and today it can be seen from the prices paid for everything related to goods, such as wheat, eggs, milk, oil, products that consume consumer baskets,” Guzman said. “Over the past three weeks, the impact on food prices has been significant and obvious. What to do does not mean a situation in which these shocks seriously regress,” Guzman continued.

Likewise, Chief of Staff Juan Manzour said that although the tools used by the government were those of private price transactions through trusts that subsidize local prices (such as oil), “there are other types of measures, such as the Ministry of Agriculture. It was necessary to take Julian Dominguez (see. Temporary export closure) is understood as part of an absolute exception, “the Prime Minister said because of the war in Ukraine.

This Tuesday, Alberto Fernández spoke more directly about the price situation. “Every time I believed that everything was going smoothly, everything became more complicated. When we think that the pandemic can make us develop freely, Argentina has wars that come in the form of Europe and economic complications that affect the whole world,” this was stated by the President. “The biggest complication is that the war has caused a tremendous struggle for food, and prices are flying around the world. “He added.

“The inflation war in Argentina began on Friday, hoping to be able to clarify the debt issue this week.

Inflation in February was 4.7%, accumulating 52.3% last year, making the monthly interest rate higher than expected. According to the diagnosis of the Ministry of Economy, prices showed the immediate impact of military conflicts in Eastern Europe. The Ministry of Finance reported that “this indicator was affected by the impact of rising international prices of basic goods due to drought and conflict in Ukraine.” At the end of the last month of CPI 4 days ago.

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