The government in Buenos Aires said that Argentina’s inflation rate reached nearly 99 percent, while prices are rising at the fastest pace in the world, and workers’ budgets are overstretched as costs exceed wages.
Argentina, which has been struggling with spiraling price increases for years, recorded a monthly inflation increase of six percent in January, which was in line with forecasts, reports Reuters. Annual inflation reached 98.8 percent, the highest since the country’s hyperinflation in the 1990s.
Galloping inflation rocked the economy, forcing the central bank to raise interest rates to 75 percent. The center-left government of President Alberto Fernández is trying hard to save its chances ahead of the general elections in October. Still, the conservative opposition is leading in the polls as Argentines blame the government for mismanagement and money printing.
Argentina’s government has imposed price caps on many products to curb inflation, which many residents have welcomed, but economists doubt it can solve the problem. Ahead of the price cut, the government promoted its policy as a “solution to the economic crisis.”
President Fernandez announced the price cap as a program to reduce inflation and achieve price stability to restore the population’s purchasing power, reports Deutsche Welle.
Brazil and Argentina announce common currency
Brazilian and Argentine Presidents Luiz Inácio Lula da Silva and Alberto Fernández announced in a joint statement that the two largest South American countries are working towards a tighter economic connection, which would include the introduction of a common currency.
They intend to remove barriers that prevent mutual exchange, simplify and modernize the rules, and encourage using local currency. They also decided to advance talks on introducing a common South American currency that they could use in both the financial and commercial sectors, thus reducing costs and their external vulnerability.