BUENOS AIRES (Reuters) -Argentina’s monthly inflation rate slowed to 4.9% in November, the lowest in nine months, providing a silver lining for the South American country’s embattled government even as it grapples with annual price rises heading toward 100% by the end of the year.
Citing the cool-off, Argentina’s central bank held its benchmark interest rate steady at 75% later on Thuesday, extending a pause on hikes after one of the world’s most aggressive tightening cycles. Inflation in October was 6.3%.
The official INDEC statistics agency said rolling 12-month inflation in November hit 92.4%, with prices up 85.3% during the first 11 months of the year. The monthly rate, though, was the lowest since February and well below analyst forecasts of 5.9%.
Despite the monthly slowdown, Argentines are still battling one of the highest inflation rates in the world, which eats away at wages and saps earning power. Poverty is high at nearly 40% with many having to tighten their belts as prices rise.
“It is difficult to manage a budget from one month to the next,” Natalia Jones told Reuters on the streets of Buenos Aires shopping for vegetables. “The rent in my house is being hiked every three months instead of six months as normal.”
Eduardo Ortega, manager of a grocery shop in Buenos Aires, said it meant people were cutting back on the amount of food they could buy.
“Habits have changed a lot. Before, people used to get two kilos, one kilo. Now they don’t,” he said. “If it was whole fruit before now it’s half a fruit. It changed a lot, just in the last year.”
The government has looked to tamp down food costs with price freeze agreements with retailers. The items that saw the most increase in November were housing, water, electricity, gas and other fuels, up 8.7% due to a reduction in state subsidies.
And analysts said the outlook remained complicated after years of struggling to bring down high prices.
“With fair pricing policies, it was expected that the rise in the CPI would moderate. However, this measure acts only as a patch and magnifies the problems ahead,” said economist Santiago Casas, from the Fundacion Libertad y Progreso consultancy.
“Without a stabilization plan carried out by a credible government, where a solution is given to the debt in pesos and the fiscal deficit is reduced, inflation will remain high.”
Source: Economy - investing.com
