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Argentina: Inflation eases to 8.8%, but recession now felt

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Αργεντινor: Ο &pi ;λθωρσυποησο 8.8%, αλ λογνεαισηφεη /></p>
<p>A greengrocer counts Argentine peso bills at a local market, as Argentina is due to release consumer inflation data for April, in Buenos Aires, Argentina May 11, 2024. REUTERS/Irina Dambrauskas </p>
<p class=“Since wages don't keep up with inflation, it's like we don't see any change,” says a supermarket worker in Argentina, where the recession is now starting to make itself felt.

Inflation Argentina's was estimated to have fallen to 8.8% in April, slowing for the fourth month in a row since hardline liberal President Javier Millay took office., however, remains at a spectacular 289.4% year-on-year as all eyes turn to the impact of the recession (pictured by Reuters, above, a grocer counts pesos at a local market in the capital, Buenos Aires).

The price index for April, published yesterday by the national statistics institute (INDEC), fell below the 10% mark for the first time in six months (since October). Its downward trend continued (from 25.5% in December to 20.6% in January, to 13.2% in February, to 11% in March).

Argentina's economy will shrink by 2.8% of GDP this year, according to IMF estimates

Based on adjusted figures, inflation in Latin America's third-largest economy nevertheless reached 65% in the first four months of 2024 and 289.4% year-on-year — these are levels the country has not seen in 33 years.

Inflation in April was driven by the prices of water, electricity, natural gas and, more broadly, fuel, which are rising, as long-term government subsidies for these items are being phased out, as part of a policy with a stated goal of “zero deficit” by the end of 2024.

But the impact of the 54% devaluation of the peso (in December), the so-called price liberalization, the removal of subsidies, the paralysis of public works, the decline in purchasing power and anemic consumption is becoming noticeable as Argentina gradually sinks into recession.

Industrial production shrank in March by 21% year-on-year, construction activity by 42%. While private consumption, the Focus Market institute recorded, fell by 20.4% year-on-year in April.

Argentina's economy will shrink this year by 2.8% of GDP, according to International Monetary Fund estimates. Fund (IMF), having already contracted by 1.6% in 2023.

Poverty affected 41.7% of citizens

“We are crushing inflation,” President Miley triumphantly said on Tuesday before the release of April data, which analysts had expected would slip below the 10% mark.

“Prices are rising, but not in such a destructive way as a few months ago. We would say that they are stabilizing, but since wages do not follow inflation, it is as if we do not see any change”, summed up Marilina Hill, a supermarket worker, 46, speaking to AFP.

Last Monday the The IMF praised Argentina's “faster-than-expected progress in restoring macroeconomic stability”, in particular “the first quarterly fiscal primary surplus in 16 years”. ” to increase “productivity, private investment and formal employment.”

At the end of 2023, the informal sector employed 45.3% of the working population, while poverty hit 41.7 % of citizens, according to official data — before the impact of austerity measures has even begun to be felt.

Source: 24h.com.cy

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