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REFILE-UPDATE 1-Argentina freezes prices on up to 200 goods
December 20, 2013 / 3:10 PM / 4 years ago

REFILE-UPDATE 1-Argentina freezes prices on up to 200 goods

BUENOS AIRES, Dec 20 (Reuters) - The Argentine government on Friday announced price freezes on up to 200 goods to offset an uptick in already steep inflation, in a move that for the first time affects suppliers, in addition to supermarkets.

Private economists say Argentine inflation is running at more than 25 percent annually. Official figures, widely disputed as manipulated, put inflation in the 12 months through November at 10.5 percent.

The price freezes affect products that represent roughly two-thirds of typical low-income household purchases, the government said.

Unlike this year’s two previous price freezes, this new measure affects suppliers as well as supermarkets. The year-long freeze will take effect on Jan. 1, and prices may be revised during the course of 2014.

“It’s basically a voluntary price agreement between the national government and the sector’s main actors,” Economy Minister Axel Kicillof said. “It’s a voluntary agreement on prices because we know that controls imposed on the private sector and price freezes imposed on the private sectors aren’t successful.”

Most of the goods affected by previous price-freezes were not sold in supermarkets.

The main supermarkets operating in Argentina, Latin America’s No. 3 economy, include units of Chile’s Cencosud , France’s Carrefour and the United States’ Wal-Mart Stores Inc.

INFLATION WEIGHS

Allies of President Cristina Fernandez took a beating in October’s mid-term elections, in part because of the soaring inflation.

Since then, officials have started to publicly acknowledge steep price increases.

Argentine inflation, Latin America’s second-highest after Venezuela‘s, has picked up in recent months due to a weaker peso currency.

The central bank has allowed the currency to lose roughly 18 percent since the beginning of June. The bank had previously artificially kept it strong to avoid stronger inflation pressures.

But the policy in turn hurt the grains powerhouse’s key exports, putting Argentina’s trade surplus at risk. Maintaining a trade surplus is critical because Argentina has been shut out of international capital markets since its massive debt default more than a decade ago.

The 2002 default pushed millions of middle class Argentines into poverty.

Generous welfare spending under Fernandez has improved the lives of many of Argentina’s poor, though the policies have also stoked inflation.

Argentina’s 4.3 percent rate of poverty was by far the lowest among 11 Latin American countries surveyed in both 2011 and 2012, a United Nations body said earlier this month.

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