In the last two months, the Argentine economy has officially entered a new level of inflationary inertia. Prices are no longer rising at an average annual rate of 20/25% as they were 10 years ago, and no more than the other 40 to 50% as they have been for the last five years.

Now even the government acknowledges that even if “everything goes well”, they will move an average of 65% as flooring, which would be a relief, as they did at the 23.1% level in the first quarter. Not only did it leave the economy at the highest threshold after the end of hyperinflation, but it is equivalent Dangerous 86.5% per annum.

A review of the figures reveals that the “endemic” problem, as President Alberto Fernandez likes to describe it, has worsened especially in recent months. It is somewhat predictable, given the $ 1.4 trillion in fake output In the last quarter of last year and the traditional lag of its impact.

But what is most troubling is that the situation becomes more delicate at a time when, as has not been the case for decades, Rising prices were again a problem for the whole world and the Argentine economy was left without anchors Given that without the reserves of the Central Bank (BCRA), some regulated price delays (exchange rates) or the possibility of using an exchange rate for these purposes are exhausted.

The only restraint framework, although not focused on inflation, is provided for in the agreement with the International Monetary Fund, which coincides with the market. But since much of the ruling party (even public officials) opposes its implementation, Suspicions of possible violations are growing in a few months. The picture described is not unfamiliar to any citizen who is bothered by it on a daily basis.

Now the point is, as many economists begin to understand from monetary analysis, The Argentines are accelerating the flight from the peso, which could strengthen or worsen the economy to a new nominal level in the coming months.

“It simply came to our notice then People burn more pesos in their pockets than before. This leads to confirmation [siempre en la medida de sus posibilidades] The price goes up just because everyone is sure of it Today’s expensive price will be cheaper tomorrow“Explains Daniel Marx, an economist and director of Quantum Finance, one of the consulting companies that has been warning about this issue in recent days.”

“The monetary base (BM) increased by USD 76,000 million as of May 6, a nominal increase of 2.1%, which represents a real decline of 17.9%, almost double the average for the period 2003-2022 on average (-11%). . “Real annual volatility is also negative by almost 5% in the annual comparison, which clearly reflects the decline in demand for money,” he said.

He adds that although “restrictions on access to the dollar act as a factor in the slowdown this fall,” there seems to have started a phenomenon that It forces the government to make extra efforts if they want to reduce inflation by at least a few points “In a context where the fiscal deficit may be larger and may require more cash funding.”

By the same token, just days earlier, consulting firm LCG, set up by Martin Lusto, had warned the World Bank of a $ 4.2 billion cut in April, despite injecting $ 80 billion at the end of the month to help the treasury. .

“The phenomenon that starts to worry is falling apart: there are pesos and they do not demand them”They specify what happens when the World Bank / GDP ratio is “6.6%” and falls to the same level as in 2019, when the IMF’s “zero emission” program was in place.

“At the time, the supply of pesos was scarce due to the deliberate use of a monetary policy of compression, but Today we are in the complete opposite situation: the peso is introduced, but not desirable to society“, They recall.

“What is perceived is that there are sectors that have a high level of activity in the context of declining revenues, given that they are undermined by high inflation. that Indicates a greater propensity to escape from gravity, which in this context“It’s going to be quite exciting.” Guido Lawrence.

To this must be added that the velocity of money circulation increased in the first half of the year. “Cash flow rate M2 Private (Publicly held currency, demand deposits and savings deposits) Realize that citizens are spinning our money at the highest rate since February 2020, Or a moment of sharp slowing down due to eternal quarantine. And it is growing, “he said in a report on the Personal Investment Portfolio (PPI).

The same phenomenon is perceived by consulting firm W, Lawyer and CEO. William OlivetWhich warns Strange coexistence between record levels of pessimism in the population and consumption rates, which continues at a good level.

“Three million people traveled during Holy Week; It is difficult to take a place in a more or less famous restaurant, mass consumption increased by 7% in the first quarter, while shopping malls increased sales by 25% during this period. “This combination should lead to a better social mood, but polls show a peak of discomfort.”

The only explanation he can find is that the level of spending does not go to what is “desirable” (collecting dollars, traveling abroad, buying a house, etc.), but to what is “possible” in it. Decrease in profits measured in the context of extreme stocks and foreign exchange.

Indec price indices seem to confirm this phenomenon: three typical middle-class consumptions in April led to an increase in clothing, restaurants and health, Alfredo Sains noted a few days ago. ᲔᲠᲘ.

Cars can be added to these items, with extensive remarks and a lack of suppressed demand. “In this context, the most natural will be a recessionary adjustment due to consumption constraints, a transitional phase that helps mitigate inflation and limit its spiral risk as long as fiscal accounts are balanced. But the political situation does not help, on the contrary“- says economist and business consultant Roberto Dreamer.

“The 100% par value at which the economy moved in April is not explained by its currency, tariff or external shock, but by the general picture of bad expectations.“, – Consultatio analysts in the report coincided.

Economists explain that in addition to formal declarations, inflation inertia was mainly due to official errors. “There is no doubt that the President’s declaration of war on inflation, in the abstract and without a package of measures to try to change expectations, has accelerated price remarks.“, Explain Marina Dal PogetoFrom Echo / Go.

If this is compounded by the bad signals that the government sends to the markets, it is not surprising that the possibility of changing the exchange rate is perceived further away.

In this context, an updated cash outflow to help the Treasury – BCRA – helped the Treasury raise more than $ 166,000 million in less than 15 days (excluding the $ 550,000 million it had to print and reabsorb the record to pay. Interest Debt). “This is not a significant amount or does not comply with the obligations agreed with the International Monetary Fund. But this injection – as a sign – is very inappropriate because This happens not only when inflation flies, but also when the BCRA shows problems in buying reserves; “It also forces the market to do the math, which shows that if emissions are maintained at this pace, it will exceed 1% of the annual GDP target,” said Delphos Investment, a consulting firm.

Hence the complex picture of expectations that complicates any opportunity to launch an anti-inflation plan, even when the government so desires.