Argentina's Macri announces price truce until October elections
Facing en economic crisis, mounting inflation and unlikely re-election prospects, Argentine President Mauricio Macri announced a package of economic measures including a freeze on utility rates, a voluntary price truce, and new credit line for senior citizens.
The centerpiece of today's measures - the price truce - covers 60 basic items, mainly food. Sixteen retail chains, with 2,500 stores between them, have signed on to the agreement.
Other measures include additional lending for housing and small business - reeling under central bank rates of 67% - and a new credit line for the nation's 8 million retirees.
Buenos Aires Mayor Horacio Rodríguez Larreta, who belongs to Macri's right-wing PRO, joined the measure by suspending a 2-peso (10%) increase in subway fares planned for May 2.
Subway fares had already been raised 153% from the same time a year ago, from 7.50 to 19 pesos (44 cents).
Gentlemen's agreement
The six-month agreement comes into effect on April 22 - until the October 27 general elections, which polls show Macri would lose by up to 22 points, depending on the opponent.
The truce, on a voluntary basis, was described by Economy Minister Nicolás Dujovne as a "gentlemen's agreement." Food prices, however, have reportedly jumped by an average of 10% in advance of the truce, first rumored a week ago.
Utility rate hikes, likewise suspended until the elections, have already reached an average of 3000% since Macri took office in late 2015.
The price truce recalls a similar - but more far-reaching - "Price Care" program launched in 2013 by Macri's populist predecessor, former President Cristina Kirchner to help slow what was then 25% inflation.
Kirchner's Price Care measure largely failed, and was described by Macri during his 2015 campaign as "something that won't be needed in our administration."
Falling bicycle
Macri's "Economic and Social Program" comes a day after Argentina's INDEC statistical agency announced that monthly inflation in March had risen to 4.7% - and 54.7% from the same time last year.
Inflation has risen steadily, from 25%, since the collapse a year ago of a carry-trade debt bubble known as the "financial bicycle" triggered a sharp devaluation from 20 pesos in April 2018, to 40 by the end of August.
While a record, $56 billion IMF bailout has since contained the devaluation (the dollar has hovered around 43 pesos since February), pressure on prices has persisted.
Consumer prices have tripled since Macri took office, with real wages down 18%. GDP was down 6.2% in the 4th quarter, with 263,000 jobs lost as of January.
That's equivalent to 2 million job losses in the U.S.
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Argentina's Macri beams at the child of a working-class family whose home he visited to "discuss" today's announcement.
The voluntary price truce is set to expire in six months - just as Argentines go to the polls.
Observers noted that the family, who had already appeared in a 2018 Macri spot, lived in a smaller apartment today than they did during their last "chat" with the president just a year ago.
