Sergio Massa and his team, presenting the agreement for meat prices
The inflation number released by INDEC was shocking despite the fact that no one -neither in the economic world, nor in the ruling party, nor in the opposition- expected otherwise. The reactions, also foreseeable, added little. In principle, attempts to lower expectations, on the one hand, and acid criticism, on the other. The CPI report for January rounded off 6% monthly, posted 98.8% year-on-year and added an alarming rise in the food and beverage line, which after a few months was once again above the general average. It is clear what light turns on on the social board. Political data, not only economic.
The escalation in the food item, the most sensitive, had the precedent of the December measurement: it had recorded 4.7%, compared to 3.5% in November. In January, the jump was greater: it reached 6.8%. These are percentages that project a blow to the Total Basic Basket and the Basic Food Basket, which mark the levels of poverty and indigence. A drag problem, which would have worsened from the second half of last year.
The record of the strong increase in prices, especially in food, is not a novelty for the political leaders who are more closely related to the reality of their territories. Not only of the ruling party, but the question is how the ruling front assimilates it, focused on the struggle for the armed forces of the national table that Alberto Fernández called, amid persistent pressure from the circle closest to Cristina Fernández de Kirchner.
The expectation was and continues to be placed on the movements of Sergio Massa. The figures on the climb of the CPI in the order of 6 percentage points have been circulating for days in the offices of Economy. And the minister fast-tracked the deal on meat prices as a first reaction over the weekend as talk of bond- and rate-linked measures circulated.
In addition, as before in the face of the opposition charge on debt levels, Gabriel Rubinstein was once again in charge of the message to try to contain expectations. On the issue of debt, the vice minister had pointed to Together for Change and at the same time -in the first place- to the markets. Now, he too: he held the line on fiscal, monetary and exchange policy as a remedy, beyond price programs.
The most significant element was running over time the objective of a substantial drop in inflation. Massa had already expressed discomfort at the effect of his own forecasts on an index of between 3 and 4 points in the short term, at the beginning of the second quarter. Rubinstein maintained that the policies of the current administration would be “consistent” with levels of 4% or less, pointed out a series of factors that now played against it and added that “towards the end of the year” monthly figures could be registered that “approach 3 %”.
Last appointment of Together for Change. He criticized indebtedness and inflation, but without in-depth debate
From the opposition, the first reaction was expressed in critical tweets from a dozen leaders, including Patricia Bullrich, Mario Negri, Martín Lousteau, Juan Manuel López and Luis Naidenoff. Some messages were ironic, others were warning in tone about the social consequences. That first volley did not present a substantive statement on the causes of the economic deterioration and its inflationary expression, together with some indicators of stagnation. The previous criticism, regarding the levels of indebtedness, was halted and only received a response based on the effect that the message could have on the markets. There was no economic or political debate, despite suggestions of a destabilizing intent.
It is curious what happens in this field. The focus on the possible consequences of that opposition statement -which also generated some internal waves- seems alien to the foothills of a broader political state as a negative factor on the economy. An example: the picture of permanent tension due to the burden of the Government on the head of the Judiciary. Another: the bogging down of congressional activity.
They are issues that go hand in hand. Tomorrow, the ruling party will seek to set an agenda for the process that it hopes to expose in Deputies against the Court. Continued attempt to wear down the Supreme Court, which will meet again in those hours to deal with sensitive issues, including the dispute over the cut in funds to the City of Buenos Aires.
The painting adds marked traces of disconnection with social reality. The internal ones cross all the spaces. In the case of the ruling front, the economy is not the most visible issue on the surface, at this stage. But it is at the center of the power struggle. It is a thread that can be noticed in each movement, from the references to the direction of the administration that Kirchnerism repeats and Olivos’ plans, to the expectations around Massa.
There are elements that generate a wearing circle. In particular, the fight between Alberto Fernández and CFK, translated into fragmented postcards that add uncertainty to the electoral year that has already begun. Tomorrow the national table of the ruling party has to meet. And until the last moment, its meaning and its integration continue to be discussed and negotiated.
Kirchnerism has moved its chips to participate but at the same time leave Alberto Fernández in secondary place, despite his status as convener. He placed a minister, Eduardo “Wado” de Pedro, as a negotiator with the President himself. And he anticipated that CFK and Máximo Kirchner will not attend the meeting. It would not be then the table of the founding partners, but a body with broad representation and, apparently, little executive.
A very large table and another small table? That would largely replicate the more traditional party instances. The point, again, would be why. Inflation has just shaken the board as a strong fact of reality. Wait for a political response.
The inflation data reopens the debate at the Central Bank over the interest rate for fixed termsWhat explanations did the Government give for the 6% inflation rate registered in January
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