Inflation in Argentina reaches 100% creating poverty and unrest

Inflation in Argentina heading towards 100% is fueling government woes as real wages lag, increasing social distress and leading to a record level of protests so far this year.

Government data released on Thursday showed overall paychecks in September were up 78% from a year ago, lagging annual inflation of 83%. The growing gap between wages and inflation leads to routine marches across the country. On Friday, the government relaunched a program that freezes the prices of more than 1,500 products.

Deteriorating social prospects are testing Argentina’s ability to meet its $44 billion deal with the International Monetary Fund. The unpopular spending cuts required by the deal clash with the government’s goal of influencing voters to keep the ruling coalition in next year’s presidential election, inflation and the loss of power in purchase being a major concern.

Politically, tension is mounting within the ruling bloc amid a fragile patchwork of inflationary policies. President Alberto Fernandez has lost seven ministers since June, including most of his economic team, as powerful Vice President Cristina Fernandez de Kirchner pushed for personnel and policy changes.

Read more: Why 70% inflation is just one of Argentina’s problems: QuickTake

Here are five charts that show the impact on Argentina’s real economy of high inflation, political uncertainty and infighting.

Protests on the rise

Protests disrupting public transport in the first eight months of the year are at their highest level since Argentine consulting firm Diagnostico Politico began tracking data in 2009. Unrest is brewing particularly among the most poor of the population, who generally vote for the ruling left-wing coalition.

Growing poverty

In some of his recent statements, Kirchner pointed to the recent rise in extreme poverty to justify the introduction of stricter price controls. It’s unclear if she supports the new checks coming out on Friday.

Strong Unions

Argentina’s powerful labor unions ensure that future wage increases are at or above current inflation levels, raising inflation expectations even further. Recent gains include truckers, who will receive a 107% wage increase through August, and oilseed crushers who will see 98% increases.

Inflation versus all-cash jobs

Informal jobs don’t have unions to negotiate wage increases, but these all-cash jobs have reached record levels after the coronavirus pandemic, accounting for half of the labor market by some estimates. Millions of these workers lose significant purchasing power in 2022, adding to years of steep decline.

Inflation vs payroll jobs

Traditional wage jobs have also rebounded above pre-pandemic levels, but since the labor market bottomed in June 2020, more than 80% of the gains have been in sectors where wages often lose face. to inflation, such as construction, retail, hotels, restaurants and real estate.

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