Argentina plans 35 pct electricity price hike next year -sources

BUENOS AIRES, Dec 27 (Reuters) - Argentina plans to raise electricity prices by an average 35 percent nationwide next year, government sources directly familiar with the matter said on Thursday.

Higher power bills would hit families already struggling with high inflation and a shrinking economy that has caused job losses and an increase in poverty.

The 2019 electricity price increases will come in four stages, starting in February, said the sources, who asked not to be named because the policy had not yet been officially announced. Public utility prices have soared as the government has cut subsidies as part of its deficit reduction program.

President Mauricio Macri has agreed to reduce the primary fiscal deficit, expected at 2.7 percent of gross domestic product this year, to zero in 2019 under a standby financing agreement with the International Monetary Fund. Subsidy cuts are a key part of his fiscal program.

Inflation is expected to end this year at over 47 percent, in part due to increases in electricity, water, heating gas and public transportation prices. Analysts expect the inflation rate to fall to under 28 percent next year, although higher utility bills will put upward pressure on consumer prices.

Energy subsidies are expected to total $5.11 billion next year, down from $6.88 billion in 2018 and far under the $17.23 billion that the government spent on energy when Macri took office in 2015, according to data from the office of the country’s energy secretary.

Reporting by Eliana Raszewski, writing by Hugh Bronstein, editing by Rosalba O’Brien