Argentina’s government is taking steps to curb rising inflation. Sergio Massa, minister of treasury, proposed a program called “Fair Prices,” to force retailers and producers to establish a fixed price on various products, to be maintained for up to 90 days.
Argentina will rely on price controls to win the Inflation battle
Argentina’s rising inflation levels have led the government to recommend a range of steps to control inflation over the next three months in 2022. Sergio Massa (Minister of Treasury in Argentina) has suggested a price control system to keep some prices fixed for at most 90 days.
The program, which has been named “Fair Prices,” will be the result of a series of talks with companies that produce goods of mass consumption, in which the prices of these goods will be directly indicated on the packaging. It will not only include foods and beverages, but also products of other kinds, such as cleaners, medicines, appliances and cleaning supplies.
Because inflation in Argentina is the most severe punishment, we make macroeconomic decisions to start down the downward trajectory. Everyone must understand the importance of doing it in an atmosphere where everyone has to contribute.
Increased Inflation and Price Control
Some see the proposal as a double-edged weapon, considering that prices controls can lead to more inflation. Controlled prices could also result in black markets or scarcity as was the case in Venezuela over the past decade. In fact, Argentina already has another price control structure established called “Supervised Prices,” which includes 452 products of leading brands in the country that will receive a defined increase in the last three months of 2022.
The compliance rate of stores and supermarkets with this program stands at 60%. The Argentine government has issued heavy fines to retailers and stores. Secretary of national commerce, Roberto Feletti, stated in March this was the product of the “speculation of those who want to buy more apartments in Miami, because they want to validate a 50% increase in dollars in their stocks.”
With the Consumer Price Index (CPI), numbers at almost 80% for August, inflation is expected to exceed 100% in 2019. This and numerous currency controls have caused Argentines use crypto to protect themselves against inflation and preserve their purchasing power.
How do you feel about Argentina’s new price control program? Leave a comment below.
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