BUENOS AIRES Reuters - Argentina's inflation rate of spiked back up to a higher than expected 3.5% in September after months of declines, heaping pressure on the Peronist government as it looks to keep prices down ahead of key midterm elections in November.
The monthly rise of the South American consumer price index was above the median analyst forecast of 2.9% and well above 2.5% a month earlier. The 12-month rate was clocked at 52.5%, while inflation in the first nine months reached 37%
Argentina has been battling runaway inflation for years, which saps saving, incomes and economic growth. Inflation is also heating up globally.
This reverses the downward trend of recent months that was based on exchange rate anchor and price controls, but failed to change things, said Isaias Marini, an economist at Econviews. We expect inflation to increase in the coming months to end the year at over 51%. The Government has taken steps to ban prices. Earlier in the year, it imposed a strict ban on beef exports to reduce the domestic cost of meat and this week struck a deal to freeze the price of some food and household goods for 90 days.
The government made a great effort to try and reduce the CPI consumer price index " said Agustin Etchebarne of the Fundacion Libertad y Progreso. Despite this, inflation is still close to 3% monthly. Etchebarne added a devaluation and inflationary jump was expected after the Nov. 14 legislative elections where the government is expected to face heavy losses
A central bank poll of analysts has forecast inflation for this year of around 48.2%, while the government has given inflation a target of 33% in its annual budget for the next year.
The projection of an annual inflation of 33% in 2022 seems difficult to fulfill, said Victor Beker of the Center for Studies of the New Economy from the University of Belgrano.
A comprehensive anti-inflation plan for 2022 would be required which would coordinate monetary, exchange and income policy measures, which is not in sight or in development for now. A Reuters poll of analysts before the official data release forecast inflation in a range between 2.7% and 3.4%.