Highest inflation rate since 1991 – Has Javier Milei already failed?: 4 points for inflation drama in Argentina

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There is no other president as polarizing as Javier Milei (53). Switzerland has known the Argentinian since January at the latest. The right-wing libertarian caused a stir at the World Economic Forum in Davos with an emotional, provocative speech in favor of capitalism and against feminism.

The man with the chainsaw has been on duty for three months. Since then, Argentina has fallen deeper into economic crisis. A historic low was reached on Wednesday.

Argentina’s annual inflation rate rose to 254.2 percent in January, according to Indec, the national statistical agency in Buenos Aires. There is no other country with an inflation rate as high as Argentina. Especially personal care products, transportation and communication costs increased rapidly last month. Things haven’t been this bad since the hyperinflation of 1991.

Grocery shopping etc in Argentina. Prices change daily or even hourly depending on the store. “My money is losing value faster than I can work,” Luca Gomez (21) tells Blick. A student from Buenos Aires finances his life with summer and winter jobs during the semester break. “What I bought in November and December feels like it’s worth almost nothing now.” Two years ago you could drink coffee for 200 Argentine pesos, today it costs 2000 pesos.

No wonder Argentines are creative. If you have the opportunity, you can convert your savings into US dollars. In addition to the official peso rate, there has been a rate called the “Blue Dollar” for years. You can currently buy one US dollar at the bank for 833 Argentine pesos; The price of a bill with a blue dollar rate on the street is 1100 pesos. “This is the only way I can put at least something aside before my savings disappear again,” Gomez says.

“The recent rise in inflation can be traced to Milei’s policies,” says Peter Birle, a political scientist at the Ibero-American Institute (IAI) in Germany. However, he still wants to wait and see the developments in the next few months. “Milei had said all along that inflation would rise before it was expected to fall.”

The Argentine president’s problem: He doesn’t have a majority in parliament. As a result, he will be unlikely to implement many of his radical promises, such as removing half the ministries, closing the central bank or introducing the US dollar. But political scientist Birle assumes there will be more radical cuts in subsidies over the next few months. “At the same time, the government wants to privatize state-owned companies on a large scale.”

According to Birle, there is no doubt that Argentina needs fundamental reforms. “But Milei’s radical approach of not giving any role to the state is completely wrong.” His approach is not the right way to succeed in a globalizing world economy. “Argentina keeps falling from one extreme to the other, that’s part of the problem.” According to the political scientist, it can only achieve long-term success if Milei and his government learn and are willing to compromise. “Unfortunately, so far I have seen little sign of Javier Milei’s ability to learn.”

Source :Blick