Over the past two weeks, the owner of a trendy wine bar in Buenos Aires has seen the price of beef rise 73 percent, while the price of the zucchini he puts in his salads has risen 140 percent. An Uber driver paid 60% more to fill up the tank. And one dad said he spent twice as much on diapers for his toddler as he did last month.
In Argentina, a country synonymous with galloping inflation, people are used to paying more for just about everything. But under the country’s new president, life is quickly becoming even more painful.
When Javier Milei was elected president on November 19, the country was already suffering from the third highest inflation rate in the world, with prices rising 160 percent from the previous year.
But since Mr Milei took office on December 10 and rapidly devalued Argentina’s currency, prices have soared at such a dizzying pace that many people in the South American country of 46 million people are embarking on new calculations to determine how their businesses or households can survive the crisis. the deeper economic crisis that the country is already experiencing.
“Since Milei won, we have been worried all the time,” said Fernando González Galli, 36, a philosophy teacher at a high school in Buenos Aires.
Mr. Galli has tried to cut his spending without making life worse for his two daughters, aged 6 years and 18 months, including switching to a cheaper brand of diapers and rushing to spend their Argentine pesos before their value drops. disintegrates further. “As soon as I get my salary, I’m going to buy everything I can,” he says.
Nahuel Carbajo, 37, owner of Naranjo Bar, a trendy wine bar in Buenos Aires, said that like most Argentines he had become accustomed to regular price increases, but last week it was fine beyond what he was used to.
Since Mr. Milei won, the price of the premium steak served by Mr. Carbajo has soared 73 percent, to 14,580 pesos, or about $18 per kilogram, or about 2.2 pounds; a box of five kilograms of zucchini went from 6,500 to 15,600 pesos; and avocados cost 51 percent more than at the start of this month.
“It is not possible for people’s salaries or incomes to adapt at this speed,” Mr. Carbajo said.
Mr. Milei’s spokesman, Manuel Adorni, said accelerating inflation was the inevitable consequence of permanently repairing Argentina’s distorted economy.
“We are left with a multitude of problems and unresolved questions that we must begin to resolve,” he said. “Inevitably, we will experience months of high inflation. »
Mr. Milei warned Argentines that his plans to shrink the government and restructure the economy would be damaging at first. “I would rather tell you an uncomfortable truth than a comfortable lie,” he said in his inaugural speech, adding last week that he wanted to end the country’s “pattern of decline.”
Argentina’s economy has been mired in crisis for years, with chronic inflation, growing poverty and a plummeting currency. The economic crisis paved the way for the presidency of Mr. Milei, a political outsider who had spent years as an economist and television pundit denouncing what he called corrupt politicians who had destroyed the economy, often for personal gain.
During the campaign, he pledged to use a chainsaw to fight government spending and regulation, even wielding a real chainsaw at rallies.
After Mr. Milei’s victory, price increases began to accelerate in anticipation of his new policies.
The previous left-wing government used complex currency controls, consumer subsidies and other measures to inflate the official value of the peso and keep several key prices artificially low, including gas, transportation and electricity.
Mr. Milei vowed to undo it all, and he wasted no time.
Two days after taking office, Mr. Milei began cutting public spending, including consumer subsidies. It also devalued the peso by 54 percent, bringing the government’s exchange rate closer to the market’s valuation of the peso.
Economists say such measures are necessary to resolve Argentina’s long-term financial problems. But they also brought short-term pain in the form of even faster inflation. Some analysts have questioned the lack of adequate safety nets for poorer Argentines.
In November, prices rose 13 percent compared to October, according to government data. Analysts predict prices will rise another 25 to 30 percent this month. And by February, some economists predict an 80 percent increase, according to Santiago Manoukian, chief economist at Ecolatina, an economic consulting firm.
These forecasts are partly due to soaring gas prices, which increased by 60% between December 7 and 13, and which are having a ripple effect on the economy.
Currency devaluation immediately made imported goods like coffee, electronics, and gas more expensive because they are denominated in U.S. dollars. A monthly subscription to Netflix in Argentina jumped 60 percent to 6,676 pesos, or $8.30, the day after the devaluation, for example. It also prompted some domestic producers, including farmers and livestock ranchers, to raise their prices to bring them in line with their own rising costs.
In the face of chronically high inflation, unions often negotiate large increases to try to keep pace, but these wage increases are quickly absorbed by large price increases. Informal workers, a list that includes nannies and street vendors, and who make up almost half the economy, also do not benefit from such increases.
On Wednesday, Mr. Milei launched his next big steps to overhaul the government and the economy with an emergency decree that dramatically reduces the state’s role in the economy and eliminates a series of regulations.
The measure prohibits the state from regulating the rental real estate market and setting limits on fees that banks and health insurers can charge customers; amended labor laws to make it easier to fire workers while limiting strikes; and transforms state-owned enterprises into corporations so that they can be privatized.
Many legal analysts immediately questioned the constitutionality of the executive order, saying Mr. Milei was trying to overthrow Congress.
After the speech, residents of Buenos Aires, like Jesusa Orfelia Peralta, 73, a retiree, took to the streets banging pots and pans to show their discontent.
She worried that rising prices would make proper health care too expensive for her and her husband. Despite having serious spinal problems, she said she did not hesitate to go out, using a walker, and express her anger in public. “Where else would I be?” she says.
Mr. Milei has sought to discourage protests by threatening to cancel social programs and impose fines on anyone involved in demonstrations blocking roads. Human rights groups have widely criticized these policies, saying they restrict the right to peaceful protest.
For now, most Argentines are trying to find a way to make ends meet in what often feels like a complicated economics class and a frantic sprint to buy before prices rise again.
“I always say that we are at university and every day we take a difficult exam, every five minutes,” Roberto Nicolás Ormeño, owner of El Gauchito, a small empanada shop in downtown Buenos Aires .
Mr Ormeño said he scours the market for his ingredients and changes suppliers almost every week, either because they raise prices too much or provide lower quality products.
It’s trying to avoid passing on too many of its price increases to customers, although it’s not sure how long it can keep that up. “I see my regular customers buying a dozen instead of two” dozen empanadas, he said.
Marisol del Valle Cardozo, who has a 3-year-old daughter, has cut back on spending to make ends meet, switching to cheaper brands and going out less. “We don’t turn on the air conditioning as much,” she said. “We have reduced our weekend programs from four times a month to just one. »
Ms. Cardozo, who works for a police department outside Buenos Aires, said she got a raise this year, but it was already not enough. She also drives an Uber, but said fare increases have not kept pace with soaring gas prices.
Despite the challenges, Ms. Cardozo said she remained a supporter of Milei and hoped her policies would work.
“We were living in a dream,” she said, referring to gas prices before the recent hike. “If these adjustments are necessary to thrive, they are worth it. »
Jack Nicas contributed reporting from Rio de Janeiro.