“The negotiation began with one scenario and ended with another,” said an official source. Even if Russia’s invasion of Ukraine ends, they expect international food prices to remain high. They point out that with the announced measures prices can be “stabilized”: “We hope that with the measures we can stop the escalation in March and in April we will have a drop in inflation,” assured the Minister of Productive Development, Matías Kulfas, in Press conference.
The Government of Cambiemos left an inflation of 53.9% in 2019, the highest since 1991. In 2020, the year of the pandemic, it fell to 36.1%. The Ministry of Economy sought to lower it by 5 points per year. But the first quarter of 2021 saw a rise in international food prices, which they say added around 14 points to 2021 inflation, which ended at 50.9%.
“About rainy, wet,” said an official source. Again the Government proposed to lower inflation in 2022, but the invasion of Russia generated a new price in food and energy. Faced with this panorama, the economic team assures that if they did not take action, inflation in 2022 could reach 60 or 65%, as projected by private consultants. “The impact of the war injected an additional impact into inflation, but we are acting to avoid validating these increases,” added Kulfas from Casa Rosada.
“regressive shock”
The Government is optimistic about the latest macroeconomic data: GDP grew 10.3% in 2021, unemployment fell to 7% and poverty fell to 37.3%. “Today we are doing well in terms of GDP growth and employment, but we are still weak in income distribution”said an official source. In fact, after the publication of the poverty data, Kulfas wrote on his twitter: “We know that the acceleration of inflation in recent weeks has a significant impact on the basic basket. Therefore, the highest priority of economic policy is being the stabilization of prices”.
As this newspaper was able to know, for the moment there will be no more measures than those already announced. What will speed up are the meetings with businessmen and unions to set expectations, such as the one on Monday with the UIA and the CGT. “We will make the dialogue more intense, the businessmen are willing and the CGT helps”assured an official source. Although the Government promoted parity around the 40-45%, the concern does not go through formal salaries. They will promote the reopening and semi-annual reviews.
In the Government they see how European countries estimate to have a monthly inflation of around 3%, which is usually the annual inflation in those countries. For that reason, they will also aim to strengthen revenues. The Government analyzes a bonus for minimum pensions and the AUH: the quarterly increase in March 12.28% will remain below quarterly inflation, which with March around 5% will remain above 13%.
Cecilia Todesca, vice chancellor and part of the small table of the economic team, assured that income must be addressed: “We came out of the pandemic and we have this blow from the war, the increases in energy and food put us again with a regressive distributive shock and that’s a problem“, he assured in an activity on employment carried out by the Gender Directorate in the Ministry of Economy. “The tools are not infinite, but we must focus on the social contract, agree on what needs to be protected, which is family income. Do we do it because we are good or Peronists? It’s what’s good for the economy. if we don’t grow, our agenda is unfeasible”.
The Secretary of Domestic Trade moves forward with bringing supermarket prices back to March 10 and could move forward with accusations against food companies that refuse. In addition, it set the price per kilo of bread at $220-$270, by subsidizing industrial flour with the collection of the increase in withholdings for oil companies. The portfolio led by Roberto Feletti will launch from April a list of Care Prices products for local businesses and a basket of fruits and vegetables with regulated prices, through a mechanism of state purchases elaborated with the Central Market.
Source: Ambito
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