Argentina experiencing strong food inflation with no end in sight, Premise data shows

By Joe Reisinger, CTO and co-founder(@josephreisinger)

Premise data shows year-over-year food inflation in Argentina increased from 17% in November 2015, when President Macri was elected, to nearly 28% as of February 9, 2016

Argentine President Mauricio Macri devalued the Argentine Peso on December 17, 2015, only a week after entering office. The Peso dropped dramatically — over 30 percent overnight — and has continued to drop even further. As a result, imported goods have become more expensive, which we would expect to lead to an increase in prices more broadly. Argentina was already experiencing strong year-over-year inflation prior to the devaluation — at least 14% in the latest official statistics, but is feared worse by many observers.

Following this devaluation, market observers are wondering how much inflation may have increased, and whether this trend will continue. As of today, official statistics from Argentina’s National Institute of Statistics and Census (INDEC) are current only through October 2015 and cannot answer these key questions. Food accounts for around one-fifth of consumption in Argentina and thus food inflation is important for understanding overall price trends.

Premise has been collecting data on food inflation in Argentina since 2013. From December 2015 through mid-February 2016, Premise’s Argentina Food Staples Index experienced a large spike in year-over-year inflation. The figure below shows that year-over-year food inflation in our data increased from around 17% in November 2015, when President Macri was elected, to nearly 28% as of February 9, 2016. In the last month alone, food inflation has increased by over five percentage points, with a continuing strong upward trend.

Our data suggests that the devaluation has immediately led to strong inflation, with no end in sight. This is an important part of understanding Argentina’s broader economic trajectory, as it’s buffeted by a global economic slowdown in emerging markets, and inflation simultaneously continues to rise.

Premise Argentina Food Staples Index, Year-over-Year Inflation

In Latin America, Premise is also collecting food inflation data in Brazil and Venezuela. Though the root causes likely differ, Premise’s data is also showing recent strong increases in inflation in both of these countries, mirroring Argentina.

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