Inflation soars in Argentina
With prices soaring, the Argentinean central bank has raised interest rates to 69.5% in an attempt to curb inflation, which is currently running at 70%.
The gravity of the situation is evidenced by the fact that, in Sergio Massa, there is now a third minister of finance in six weeks after the two previous ones resigned.
The new minister has pledged not to ask the central bank to print more pesos to fund government spending this year with the aim of this, combined with the new interest rate level, dampening inflation. Nevertheless, analysts are predicting that inflation will hit 90% by year end.
Commentators have pointed out that, in such an unstable market, budgetary planning is almost impossible for companies and if a payment arrives late, the funds will have lost part of their purchasing power owing to the combination of inflation and the local currency being devalued against the US dollar.
Rising energy costs will affect all sectors, including tanning, footwear and the agricultural sector.
