3.9 is bad news, it’s math, it’s economics, it’s politics, and overall it’s a snowball, a red cry of alarm for the government which cannot circumvent the strong inflation inherited from Mauricio Macri. As if they were saviors, the orthodox economists who were at the origin of this crisis, claim the same measures that caused it. But the various elevators the government has tried have not worked so far either. For voltage shocks, there are stabilizers, a device that is installed between sockets and electrical appliances. And in government sectors, it is already said that the food market is so sensitive to shocks that it needs a stabilizer between producers and consumers, a public food company.
The idea was floated Thursday by official spokeswoman Gabriela Cerrutti.
Since it was food and, above all, vegetables, fruits and vegetables that drove the index up, he explained that the company would be a tool to subsidize small and medium producers and improve transport.
The right was quick to react. The same orthodox economists who brought inflation to this level shouted “Argenzuela!” Venezuela is a major oil producer whose price has fallen and caused a strong crisis. Argentina is a food producer whose prices have not fallen but have reached a record high. Venezuela has inflation because it has done poorly with the price of oil. Argentina has inflation even though it has behaved very well with international grain prices. Venezuela seems more reasonable.
There are those who say it’s speculation, there are those who blame the stakes, those who point the finger at devaluation, or the increase in costs and wages, intermediaries and transport. There is a consensus that it is a multicausal phenomenon, but no diagnosis so far has been able to stop it. Macrismo’s policies of devaluation and astronomical increases in services and gasoline fueled the inflation process, which in 2015 had reached 24% per year and brought it to over 50%. They can give their opinion but they have no moral or technical authority for the raised little finger.
“Normally, the increase in food prices is above the inflationary average, this means that there is cruelty towards Argentine households and a huge transfer of resources from popular sectors to concentrated sectors of the economy” . So spoke the National Director of Integrative Policies of the Ministry of Social Development, Rafael Klejzer. The official explained that “a National Food Company, directly associated with producers, will promote the active role of the State, in terms of planning, regulation, control, production, cost analysis and food marketing“.
But in the environment of Minister Martín Guzmán, they quickly ruled out the possibility of creating the National Food Company and it was indicated that the Secretary of Commerce, Roberto Feletti, would maintain the agreement policy. At the Ministry of Commerce, it is estimated that seasonal factors caused prices to explode, which pulled the general index down. The idea of the National Food Company is not the axis of the divisions within the government. Instead, it felt like a trial balloon launched to warn big food companies that shamelessly violate agreements. It was a way of letting them know that the idea is circulating through the government as a last resort if the agreed prices don’t work out.
These corporations that monopolize food production have operated against laws such as the Gondola Law or the Front Labeling Law which have also been rejected by the macrismo. And there is a synchronous game between this political force and this sector of economic power, despite the fact that three of the five big companies in the sector (Molinos, Arcor and Mastellone, accumulated more than ten billion pesos in losses during the macrismo) .
Throughout the pandemic, the prices of the products of these three companies rose above the rate of inflation, so that during this difficult first year which caused the greatest global economic crisis in a hundred years, Molinos, Arcor and Mastellone recovered what they had lost with the macrismo.
Economists operating in line with the interests of these corporations are proposing the very policies through which they have lost fortunes, to oppose the government that allowed them to recover from those losses. These are policies that recognize their hegemony, but which cause them to lose money. They prefer policies that recognize their privileges, even if they go against the consumption on which they depend.
Along with the inflation index, the Indec reported that consumption rose 6% from the previous month. And that the industry operates with 64% occupancy of its installed capacity, a record for recent years, in which the macrismo had reduced it to its minimum expression.
They seem contradictory figures. At least they express an unequal process where what is gained on one side is lost on the other. Popular sectors affected by distributive policies and others hardest hit by inflation. When the prices that increase the most are those of food, the most affected are the most vulnerable, because this is what they consume the most. But even those who have been favored feel that they are losing.
Many people on the street are unaware of the debt saga, let alone issues such as the law, but they can give a class on the awards. Those who go to buy Chinese or greengrocer with a sheet of adding and subtracting paper can do a course on inflation. In addition to being a calamity for people who live on a salary or receive a plan or the AUH, inflation also becomes the visible face of a government, even more than debt or an anachronistic magistracy, questions they also basic but not so visible.
The great contradiction of this snake biting its own tail is that in protest against inflation, a large part of the working classes turn electorally towards those who caused the problem and they will deepen it or replace with something worse, as Domingo Cavallo did with one-to-one convertibility.
In a context where inflation does not yield, the increase in services arises. After two years of tariff freezes, the electricity tariff increased by 9% in 2021 and now the increase would be 20%, with inflation over 50%. In another situation, it would be a reasonable increase, well below inflation. But with inflation that cannot be contained, it adds to another factor that is pushing prices higher.
The times of the economy no longer correspond to those of politics. The multiple causes of inflation cannot be solved overnight or with a single measure. It’s a gradual and time-consuming process, say economists. But the government only has this year, not to eliminate it, but to bring it down to more manageable levels for government, for businesses and for citizens. It will then fully enter an election year and it will not be a good scenario for the ruling party if it does not get a significant drop in price inflation.