Argentina's surging prices add urgency to new president's plan

Argentina's surging prices add urgency to new president's plan

By Miguel Lo Bianco

The relentless pace of creeping prices in Argentina provides the new president's plan for immediate shock therapy little margin for error, with many citizens already wondering how they will survive annual inflation nearing 150%.

President Javier Milei's economy chief laid out the new government's initial policy push on Tuesday, targeting deep cuts to public spending and a sharp currency devaluation that will stoke short-term inflation as it hopes to staunch the bleeding in the country's worst economic crisis in decades.

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Economy Minister Luis Caputo, like Milei in his first few days on the job, announced the value of the peso currency will be halved, public work tenders halted and energy and transport subsidies reduced.

The government will also, however, double social spending for the poorest.

"What I see is everything getting more expensive almost every day, and I don't know for how long we'll be able to make it, because if salaries stay low and prices keep rising there won't be enough to eat," said 63-year-old retiree Maria Cristina Coronel.

Just to survive, many people are scouring markets in a race against time to find the best prices, which are updated daily in many stores.

The country's annual inflation rate is approaching 150% and the poverty rate at 40% and growing, as many pin their hopes on Milei's turnaround pitch, though he has said things will get worse before they get better.

In his inaugural address on Sunday, the radical libertarian outsider said monthly inflation will likely range between 20% to 40% through February. He warned that hyperinflation of some 15,000% could materialize if government spending is not dramatically rolled back.

"There's no money," Milei repeated during his somber speech, a slogan that is now emblazoned on T-shifts sold on the streets of the capital.

"Last time I went to the butcher, I saw people buying just a quarter (kg) (0.55 pounds) of ground beef or chicken breast. I've never seen that," said Beatriz Nunez, a 62-year-old shopkeeper, underscoring the grim day-to-day reality.

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"But we have to have faith," she added. "We hope everything will change."

Many share her hope for change, which buoyed Milei to a resounding victory over a center-left Peronist government viewed by most as a failure.

"I see an opportunity for them to change this once and for all because people are in favor of it changing," said Ricardo Soccola, a merchant from the outskirts of Buenos Aires.

But even as many cash-strapped Argentines want Milei to succeed, his task is made even harder due to his lack of majority support in Congress, which will also need to approve many of his proposals.