I was going to title this as How To Live With Hyperinflation, but since there are no real answers to that particular conundrum, I would have found it difficult to summarise in just a few words. Furthermore, this is not a political rant, because we don’t do that here on DCT, but more a résumé of the peculiar economic abyss that Argentina finds itself buried in, almost by default, decade after decade.
A New Broom…
As the saying goes, a new broom sweeps clean (but the old broom knows all the corners) and a new Argentine president was sworn in on December 10th, promising to take a chainsaw, not only to the economy but to the entire governmental apparatus. It’s no exaggeration to say that Argentina has been living on borrowed time for years, always spending more than it can afford, printing money exacerbating inflation, and borrowing billions that it can’t afford to pay back. Add stratospheric public spending and blatant corruption to that mix and it only adds fuel to a very volatile bomb that’s about to explode in our faces.
When I first arrived in 2005, Argentina was still recovering from the previous crisis of 2001, when the president resigned amid a $90bn default and five more presidents were sworn in during a fourteen-day period. Crowds still circled banks banging pots and pans on the steel doors and those institutions have never been trusted since. However, by 2005, the economy was more or less stable, the IMF had been paid back and annual inflation was about 9%. In the intervening years, it has crept up and more recently, skyrocketed to around 160% and it’s going to get worse. A lot worse.
The new government is projecting daily inflation rates of 1% per day with a possible exponential annual rate of well over 3000%. Those are scary numbers, yet those who voted for the new president are cheering these austere measures because the very system is being dismantled and cut back, even down to the pens and paper that ministers and civil servants use.
What Do We Do To Combat Inflation?
When we see a bargain, we buy double or even more to get one jump ahead of inflation. Many shops are putting their prices up every day, but there is price gouging with small corner shops, particularly the Chinese mini-supermarkets, cashing in and taking advantage of the crisis. Since the national currency was devalued last week by 56% and fuel increased by 65%, many prices doubled overnight. We all have our particular favourite food and drink treats and in my case, I have to hunt them down all over the neighbourhood until I find a price that’s just about acceptable, So, what a joy it is to come across a shop that’s forgotten to change the price of an item from X to X x2 or 3. In cases like that, I’ll often buy their whole stock if my wallet can stretch to it or simply go back later for the remainder in the hope that they haven’t cottoned on.
My wife, who is Argentine (and an accountant) and naturally has more experience in the wacky ways of this country, will hunt down bargains like a predator. She has every loyalty card available and knows where every single discount is available to the nearest square metre.
But in the end, it’s a vicious circle because as consumable items double in price, so we have to play fiscal catch-up with the services we provide. On the other hand, the light at the end of the tunnel is that the new government has taken the bull by the horns, ripped up the rule book, and made the battle with inflation its number one priority but has warned that it will get much worse before it gets better.
Forewarned is forearmed, so with the knowledge that the previous administration had stuck its head in the sand, we live in hope that Argentina can finally claw its way out of this abyss and into a brighter future.
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