The government of Argentina has begun to act in several directions to control the raging inflation numbers registered this year. Sergio Massa, minister of treasury, proposed a program called “Fair Prices,” to force retailers and producers to establish a fixed price on various products, to be maintained for up to 90 days.
Argentina to Rely on Price Controls for Inflation Battle
The raging inflation numbers that Argentina is facing this year have prompted the government to propose a series of actions directed to curb inflation during the last three months of 2022. Sergio Massa, minister of the treasury of Argentina, has proposed a system of price controls to maintain some prices at fixed levels for at least 90 days.
The program, which has been named “Fair Prices,” will be the result of a series of talks with companies that produce goods of mass consumption, in which the prices of these goods will be directly indicated on the packaging. The program will include not only foods and beverages but also other kinds of products including cleaning supplies, appliances, and medicine.
About the implementation of such a measure, Massa stated:
We make macroeconomic decisions with the intention of starting down a downward path because inflation is the worst punishment that a worker can have in Argentina. It is key that we do it on the basis of everyone understanding that we are in a time in which we all have to give a little.
Inflation Levels and More Price Control Schemes
The proposal is seen by some as a double-edged sword, given that price controls have often deviated into creating more inflation, as controlled prices can result in the appearance of black markets and scarcity, as happened in Venezuela during the last decade. In fact, Argentina already has another price control structure established called “Supervised Prices,” which includes 452 products of leading brands in the country that will receive a defined increase in the last three months of 2022.
However, the compliance of supermarkets and stores with this program is at 60%, with the Argentine government doling out hefty fines to several stores and retailers. Secretary of national commerce, Roberto Feletti, stated in March this was the product of the “speculation of those who want to buy more apartments in Miami, because they want to validate a 50% increase in dollars in their stocks.”
Inflation is predicted to reach more than 100% this year, with Consumer Price Index (CPI) numbers reaching almost 80% in August. This, and the numerous exchange rate controls of the country, have also caused Argentines to use crypto as a means of hedging against inflation and preserving their purchasing power.
What do you think about the new price control scheme to be launched in Argentina? Tell us in the comments section below.
Sergio Goschenko
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