While higher inflation is expected for the month of January than in December, President Alberto Fernández maintained that “much of the inflation is self-constructed” and that “it is in the heads of the people”, which provoked criticism from opposition leaders. .
“A large part of the inflation in Argentina is an inflation that economists call ‘self-constructed’, which is the inflation that is in the heads of the people,” said Fernández, adding: “People see in a newspaper that it is going to rise the fuel and then they start to increase just in case”.
The president made these statements to the Brazilian media Band Jornalismo, prior to President Lula Da Silva’s visit to the country. He even replayed that segment of the interview from his Twitter press account.
December inflation was 5.1%, while the year-on-year variation climbed to 94.8% in 2022, the highest figure in three decades. For January, the Survey of Market Expectations (REM) prepared by the Central Bank projects inflation of 5.6%, and some private consultants also speak of a level close to 6%.
“Inflation is bad, it is negative, and it must be eradicated. We inherited a country in which, the month I took office, inflation was 53.8%; 307 inflation points were the four years that preceded me”, reviewed the president.
And he added: “When I was in the campaign, I warned the Argentines ‘do not believe that the problem of inflation is solved as Macri said. An inflation of this nature is not resolved overnight, it takes time’”.
In addition to pointing out the legacy of the previous administration, the head of state warned regarding the effects of the pandemic and the war in Ukraine. “That boosted the inflationary process that we had been bringing,” he said.
In this sense, he considered that inflation “is the result of multiple causes, not of one”, and he mentioned the excessive monetary issue and the fiscal deficit, but he also observed that the increases in energy and food are not the product of any of these factors. , but that “they are explained by the war.”
Fernández also pointed out in the interview that “in Argentina there were very high hyperinflationary processes and people trusted more in the hard currency, which is the dollar, than in the Argentine peso. And if one wants to find an explanation for this fascination, the explanation is merely psychological: believing more in the dollar than in the Argentine peso. And also a certain reality, because in these devaluation processes, many savers lost”.
“This distrust of the Argentine peso has made many Argentines look to the dollar as a way out, but that is something that we Argentines have to correct, because the fascination with the dollar is very harmful for Argentina,” the president considered.
???? “A large part of inflation is what economists call ‘self-built inflation’. People read in the newspaper that fuel is going to rise, so they start increasing it just in case”. President @alferdez in the interview with @BandJornalismo. pic.twitter.com/fVQm2lQn8h
– Alberto Fernández Press (@alferdezprensa) January 23, 2023
Criticism of “self-constructed inflation”
Guido Sandleris, former president of the Central Bank during the Macri government, retorted: “No, President, inflation is not self-constructed nor is it in the heads of the people. People suffer from inflation every day and it is, fundamentally, a consequence of the huge fiscal deficit financed with issuance that his government has had”.
For his part, the head of the interblock of senators from Together for Change, Alfredo Cornejo, warned that “the government has the innate faculty of Kirchnerism, which is to blame the other for its failure. For them it was the people first, now it is the fault of the people”.
Deputy and economist José Luis Espert, from Avanza Libertad, attacked: “We are the only country in the world with world record chronic inflation for an entire century for ignoring the law of gravity in inflation, which is a monetary phenomenon. Yes, our own stupidity is self-constructed. Very native”.
From the Left Front, legislator Myriam Bregman affirmed that “saying that ‘a large part of inflation is self-constructed, it is in people’s heads’ is a joke on those who cannot make ends meet, cannot pay the tariffs, the cost of transportation weighs on them and all the increases that the government itself encourages by its agreement with the IMF”.