Sunday, October 1, 2023

On the verge of hyperinflation, the announcement of the VAT refund


Inflation reached 12.4% in August, marking the first time since 2002 that monthly price fluctuations reached double digits. The interannual variation is already 124.4% and the cumulative inflation for the year is 80.2%.

Monthly Inflation In August
Source: Index

Food, the item that rose the most

Those hoping that the laws of supply and demand will ever benefit workers will have to keep waiting. Groceries rose 15.6% in August. Like any primary item, it rises above average. While a few months ago there was talk of inflation of 200% year-on-year, we are now in an even worse situation. The health and home appliance categories remained on the podium with 15.3 and 14.1%, respectively.

August Inflation By Category
Source: Index

Reimbursing VAT is not enough

It is clear that the VAT refund is completely inadequate as it only covers the foods of the basic food basket and leaves out the vast majority of popular consumer goods. Furthermore, this relief measure was not offset by higher taxes on the rich. As a result, the state will collect less and consequently adjust the indirect salary of employees.

Not to mention, it is far from covering all workers. The VAT refund applies to vacant workers, pensioners and monotributists. As is well known, one of the hardest hit sectors is left out: black workers.

Devaluation and decadent capitalism

Apparently, the post-PASO devaluation has raised the price needle above the “conventional” level by the standards of the Argentine economy. The items whose prices are expressed in dollars, whether due to the sheer will of employers, as in the case of food, or because of structural problems such as health, are the ones that have increased the most. Further future devaluation is once again “justified” by this price escalation, which continues a never-ending cycle, but which also has a structural background.

We’ll say it straight: we need you to keep growing.

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Nation World News Desk
Nation World News Desk
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