The Argentine government has begun to move in several directions to control the runaway inflation recorded this year. Sergio Massa, Minister of the Treasury, has proposed a program called “Fair prices“, to require retailers and producers to establish a fixed price on various products, to be maintained for up to 90 days.
Argentina relies on price controls to fight inflation
The runaway inflation figures Argentina is facing this year have prompted the government to propose a series of measures to reduce inflation in the last three months of 2022. Sergio Massa, Argentina’s treasury minister, has proposed a price control system to keep certain prices at fixed levels for at least 90 days.
The program, which has been dubbed “Fair Pricing“, will be the result of a series of interviews with companies that produce mass-market consumer goods, in which the prices of these goods will be listed directly on the packaging. The program will cover not only food and beverages, but also other types of products, including cleaning products, appliances and medicines.
About the implementation of such a measure, Massa said::
We are making macroeconomic decisions with the intention of starting a downward trajectory because inflation is the worst punishment a worker can have in Argentina. It is essential that we do this on the basis of everyone understanding that we are in a period where we all have to give a little.
Inflation levels and other price control systems
The proposal is seen by some as a double-edged sword, as price controls have often deviated into creating more inflation, as controlled prices can lead to the emergence of black markets and scarcity, as shown by the following examples occurred in Venezuela over the past decade. In fact, Argentina has already implemented another price control structure called “Supervised prices“, which includes 452 of the nation’s leading brands that will receive a defined increase in the last three months of 2022.
However, the compliance rate of supermarkets and stores with this program is 60%, and the Argentine government pays heavy fines to consumers. fines to several stores and retailers. Secretary of National Commerce, Roberto Feletti, said in March that this was the product of “speculation of those who want to buy more apartments in Miami, because they want to validate an increase of 50% in dollars in their stocks.”
Inflation is expected to reach over 100% this year, with Consumer Price Index (CPI) figures reaching almost 80% in August. This, along with the country’s many exchange rate controls, has also led Argentines to use crypto as a way to hedge against inflation and preserve their purchasing power.