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Argentina inflation crisis: Country in debt, price of essentials skyrocketing

In this country, chaos is unfolding as nobody knows the value of anything. That’s because an iPhone costs the same as six months rent.

Hyper-inflation is not only causing a political rift that could cost the job of a President, but it is causing a situation where the price of everyday items is so far removed from normality that nobody knows what anything is worth anymore.

That is the situation in Argentina, where a failure to rein in prices has meant inflation has skyrocketed to an eye-watering 58 per cent.

For the public, that means shopping is a fraught experience where paying for basics involves guessing and finding the best price is almost impossible.

An analysis by Bloomberg reveals some shocking results about costs for items that Australians take for granted.

“A two-hour domestic flight costs the same as a month of college tuition, a pair of sneakers is equal to the minimum monthly social-security payment, and a new iPhone goes for half a year’s average rent or more,” the publication noted .

The scattering of prices was best summed up by an economist in Beunos Aires, who told Bloomberg: “Nobody knows how much something costs.”

“Talk to any Argentine of a certain age and they probably can tell you how much something went for in the 1990s, but they don’t remember how much something costs today compared to yesterday,” said Federico Moll, director of economic research at consulting firm EcoLatina.

President Alberto Fernandez could be the newest casualty of an economic bloodbath that last week cost the job of the man charged with taming sky-high inflation.

Domestic Trade Minister Roberto Feletti resigned last Monday “due to differences over how to contain steadily creeping prices”, Reuters reports.

Approval ratings for the President are sliding and he is under fire from Vice President Cristina Fernandez de Kirchner.

But controlling inflation is not an easy task in a country that has been unable to do so for three previous administrations.

The news about Argentina’s struggles comes as the country announced on Tuesday that it had reached an agreement with the Paris Club of creditor countries to defer repayment of a debt of more than two billion dollars until September 2024.

The decree in the Official Bulletin formalizes an agreement announced in March on the final repayment of a debt renegotiated in 2014.

Argentina had already secured two extensions to the $2.45 billion debt, the latest of which was due to expire on Friday.

The Paris Club is a group of creditor countries that specializes in finding payment solutions with debtor countries that risk defaulting.

The repayment extension already formed part of repayment negotiations with the International Monetary Fund on another $44.5 billion debt with the global financial institution, the decree said.

The agreement authorizes Argentina’s economy ministry to “make partial payments of debt services” to Paris Club members.

The government of President Alberto Fernandez is negotiating with each of the individual creditor countries and Paris Club authorities as a whole to come up with a new reimbursement program.

– With AFP

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