MONTEVIDEO, January 12 2024 : Argentina has taken the unwelcome regional inflation crown from Venezuela, becoming the Latin American country with the highest inflation rate in 2023 after prices rose over 200% last year, the highest level in three decades.
The South American grains producer reported annual inflation of 211.4% on Thursday, with prices rising 25.5% in December alone.
In Venezuela, dogged by years of economic crisis and where inflation in 2018 reached over 1 million percent, consumer prices last year rose a far lower estimated 193%, according to NGO the Venezuelan Observatory of Finance.
While there are doubts over official Venezuelan inflation data, consultancy Ecoanalitica also predicts prices rose 170%. Venezuela’s central bank said monthly inflation in November was just 3.5%, the ninth consecutive month in single digits.
Venezuela’s socialist government has loosened currency controls, relaxed import restrictions and encouraged informal dollarization to try and keep a lid on consumer prices in recent years, helping gradually bring inflation down.
Argentina’s CPI rises have accelerated in recent years, meanwhile, amid regular deep fiscal deficits, weak trust in the local peso and money printing by the central bank to prop up overly indebted governments.
Newly elected Argentine President, libertarian Javier Milei, has warned of the risk of hyperinflation and is pushing major reforms and tough austerity measures to tame prices.
Analysts said the inflation rate convergence with Venezuela may be short lived if Milei is successful.
“Venezuela does not have any proper fiscal consolidation strategy,” said Peter West, a London-based economic adviser at EM Funding, which specializes in investment strategies.
“In contrast, Argentina now has a rigorous stabilization program, based on a strong fiscal anchor and backed by the IMF (International Monetary Fund),” he said, though cautioned Milei faced “high” risks about putting his plans into action.
