The year 2023 in economic matters, and with an electoral process in the middle, had a large number of impacts on the population’s pockets. Annually, purchasing power was lost by 30% and workers will have to face the thawing of prices that is accompanied by high inflation by 2024. In this context, Canal E spoke with the economist and director of Ecolatina, Martin Ravazzani.
“We have very high inflation data, our estimate is 24.7% for the month of December and 21% for January”, commented Martín Ravazzani. “If this 24.7% is confirmed, we would have 209% inflation in the year that just ended and very high inflation in the first month of the year, which is why it is crucial that inflation tends to slow down in the coming weeks,” he added.
Another round of rate hikes is expected
Later, Ravazzani stated: “The devaluation did not fully hit because many prices were already with exchange rates higher than the official dollar.” Then, he stated that, “there are still many prices that are behind, but now Another round of increases is coming that have to do with the entire tariff part and the full impact of the increase in gasoline.”
A new exchange rate correction: the worst scenario for Argentina
“The biggest problem we see is that the Government made a very significant devaluation of the exchange rate, but at these inflation rates, The competitiveness gained by this leap can be lost very quickly“said the interviewee. “The worst that could happen is that a new exchange rate correction must be made”, he added.
The only brake on price increases is the fall in demand
On the other hand, the director of Ecolatina pointed out: “There is no doubt that the exchange rate was delayed and that Argentina needs a higher exchange rate to be able to export. The issue is that the devaluation is effective”. Along the same lines, she remarked that, “so far he is achieving it, but through a very painful process.” where the only brake on price increases is the drop in demand”.
“There is a very strong commitment from the authorities in the sense of having fiscal discipline, but also the adjustment in income is very hard”said Ravazzani. Finally, he stated that, “The year 2023 ended with a 30% drop in the purchasing power of the majority of the population and the sector that is suffering the most is the middle class.”