Political Risk Latin America Blog @PolRiskLatam

Argentina: what inflation?

Posted in News and Articles, Political Risk by politicalrisklatam on January 10, 2011

by Daniel Schweimler for Financial Times – Beyond Brics, January 10th, 2011.

Argentina is suffering a shortage of banknotes, with long queues outside cash machines across much of the country, especially at the Atlantic beach resorts where many go during the summer months.

The government says the shortage is a temporary one and will soon be resolved with the delivery of 10billion pesos from the mint in neighbouring Brazil. But it is ignoring the elephant in the room: stubborn inflation.

Inflation in Argentina is a dirty word. Memories are still fresh from 1989 when hyper-inflation struck and prices rose so rapidly that it was considered smart to pay for restaurant meals before you ate them.

Critics are beginning to blame the current shortage on inflation. They say the government has refused to issue a two-hundred peso note forcing consumers to use more and more of the increasingly devalued 100 peso bill.

The authorities are urging people to find alternative ways of paying their bills, such as using credit and debit cards. But many Argentines, suspicious of their banks after years of economic crises, don’t use them and many businesses, especially the smaller ones, prefer to deal in cash only, for all the obvious reasons. (continue reading… )


2 Responses

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  1. Tyson Johnson said, on January 12, 2011 at 6:34 am

    This would seem to be true – I am in Buenos Aires right now. Stores are refusing visa and debit cards, and many bank machines are either out of currency or “unplugged” altogether. We have also witnessed merchants refusing 100 peso notes, asking for smaller denominations.

    • politicalrisklatam said, on February 16, 2011 at 2:39 pm

      Thanks for sharing that with us! January was a complicated month for Argentina’s economy. Inflation was, is and will be a hot issue in its economy.
      There’s a new post related to it. Feel free to read it. And, of course, your comments are more than welcome.
      PolRisk Latam Team

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