The rise in prices in the US puts more pressure on inflation in Argentina: imports and inputs in the crosshairs

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This week the inflation data for USA and China, two economic powers that have many differences between themselves and with the Argentina. However, there is one variable in common: prices have risen in recent months. The inflationary acceleration has a local impact, especially in the supplies imported.

On USA, October retail inflation marked 6.2% year-on-year and thus registered the highest value since 1990. The increase was generalized for all sectors, although it is particularly notable in that of energy, housing, food and vehicles.

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China, meanwhile, registered a 1.5% year-on-year increase of prices in October. The value more than doubled from the previous 0.7%.

Argentina, at a different pace

The international numbers, although high, are far from the scales handled by the Argentine economy. This Thursday the October data was known, which again reached the 3.5% monthly. At the year-on-year level, meanwhile, the rise was 52.1%.

However, the rise in international prices was indicated by the Minister of Economy Martin Guzman as one of the main factors that drove the consumer price index during this year. The official particularly pointed to the increase in international food values.

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The IMF also referred to the issue and highlighted the rising cost of food and the Energy. In addition, the agency anticipated that the pressures on prices will continue to be present.

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How international inflation impacts in Argentina

After freezing the price of food and medicine, the Secretary of Internal Trade Roberto Feletti said this week it was concerned about imported inflation. Precisely, economists consulted by TN agreed that the rise in international prices may boost household costs and complicate economic recovery.

“The inflation data in the United States and China combined with the yuan fortress they generate an increase in the price of manufacturing in the Asian giant, which is a leader in many markets. It is a pressure to rise from our import prices“, he pointed Gabriel Caamano, partner of Ledesma Consultant.

Guido Lorenzo, executive director of LCG, stated along the same lines: “It directly affects domestic values ​​because importers They pay at the international price. Then there is inflation in dollars, therefore, the domestic price in that currency also rises and is transferred to the value in pesos ”.

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If import prices rise, the pressure on oil reserves will also increase. central bank, which are used to finance purchases abroad. In October, the agency had to limit imports to avoid sacrificing more dollars from its coffers.

Finally, the developed world solution for control prices it could be another bad news for the goverment. “If international inflation is fought with a rate hike It could slow down the recovery at the international level and that ends up affecting the region and, indirectly, Argentina ”, explained Lorenzo.

It is that, if developed countries pay higher interest, they will attract international capitals, that they will withdraw their investments from riskier economies, such as Latin America. “Although Argentina is quite isolated from the rest of the world, there is always some level of integration”, closed the economist of LCG.

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