If we take the behavior of inflation and the exchange rate in the last 5 elections in Argentina, considering in the accumulated price evolution of the 6 months prior to the elections and comparing it with the accumulated in the 6 months after each one of the elections we verify that in 2011, 6 months prior to the elections, accumulated inflation was 10.5% and in the 6 months after it was 12.4%. In 2013, in the previous 6 months, inflation was 15.5% and in the following 6 months, 25.5%. In 2015 in the previous 6 months it was 12.6% and in the 6 following months it was 26.4%. In 2017 it was 9.4% in the previous 6 months and 15.5% in the 6 following months. In 2019 it was 23.7% and in the 6 following months it was only 14.8%. Only the closure of the economy and the strict quarantine in the Pandemic achieved that the accumulated inflation in the 6 months after the general elections of 2019 for the first time is lower than the previous 6 months.
Source: Focus Market through BCRA
During these last 10 years for the different electoral acts, both the current ruling party and the opposition used all the fiscal and monetary tools so that the value of inflation was contained on the road prior to the elections, but the conditions were created to accumulate inflation. highest in the following 6 months. The inflation numbers for September have marked a very large evolution and those for October would be in the same trend. It would seem very little prize that the government itself is obtaining for so much repression of prices in the economy. This will be leaving a much higher inflation balance in 2022
In the case of the Official and Parallel Exchange Rate, if we take the November price for each of the elections and compare it with its price 6 months after each of the elections, we observe that if we go back to the presidential elections of 2011 , the legislative of 2013, presidential of 2015 and legislative of 2017, all of these have a common denominator pre-elections, where the values of the dollar are relatively low compared to the following six months where this same value shoots up, this is due to to a series of fiscal expansionary measures that are being developed before the elections, and around them different controls were used as a tool that contained the exchange rate to show a certain exchange rate, but at the end of that period its value resumed the upward path .
In the last presidential elections of 2019, both the official dollar and the parallel in November 19 were around $ 60, for six months later this value jumped touching a historical maximum, the official one reached $ 70, while the parallel reached $ 70. $ 126 (thus devaluing the peso by + 38%); The reason was because the government had fiscal and monetary inconsistencies, which worsened with the passing of the months that ended in the increase in the Minimum Vital and Mobile Salary, freezing of fuels, bonuses for public employees, informal and unemployed workers, social subsidies and credits to monotributistas among others.
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Source: Focus Market through BCRA
At the IDEA colloquium Martin Guzman ruled out a sharp jump in the dollar after the elections. However, against a year-on-year inflation of 52.5%, the peso devalued against the dollar in the same period by only 26%. These delays tend to be corrected after the elections. On the other hand, unlike other elections today, the gap is record at 85%, access to the exchange market is increasingly restricted, liquid reserves are scarce and with an unprecedented situation of a PAIS tax of 30% and a tax collection. to 35% earnings to only access $ 200 per month. It would seem that the cost of the CEPO shows in light that it is being very high, the profits very few and the delay in the real exchange rate as well.
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Source: Focus Market through BCRA
Despite the effort to sustain the official exchange rate, it has not been possible to contain wholesale prices, which continue to grow at 59.1% year-on-year. This situation leaves an inflationary cushion for retail prices for the next few months. On the other hand, the restrictions to access the Single Market Free of Changes by importers is not good news either because the lack of inputs and raw materials raise the prices of the available supply by companies before liquidating their Stock or directly leave production lines stopped without being able to deliver the final finished goods, increasing the prices of the only ones available in stores.
In the midst of this pre-selection odyssey the price freeze and control attack the effects of inflation and not its causes. The Careful Prices programs have a very good compliance rate of 97.4% in large commercial areas. However, compliance with the Super Cerca en Autoservicios program is only 15.4% of the total. Very low
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Source: Focus Market – Scanntech
With this price freeze, the Government assumes that it will be able to carry out a titanic task. In supermarkets and small businesses, the Government must verify some 35,000 points of sale on a daily basis. It is equivalent to controlling 50,120,000 products and prices on a daily basis. It would seem that it is easier for you to control your public spending, fiscal deficit and monetary issue. However, in all election years, all governments seek to expand with the dream of winning the elections.
