PanaTimes

Sunday, Sep 24, 2023

Latin America's leaders are waging 'war' on inflation; so far they're losing

Latin America's leaders are waging 'war' on inflation; so far they're losing

Latin America's leaders have pulled no punches in the battle against inflation. The region has some of the highest interest rates in the world, with Mexico's central bank making a record rate hike this week. But so far they are losing.

While the world grapples with rising food and fuel prices linked in part to Russia's invasion of Ukraine, Latin America stands out. It accounts for around half of the top ten policy rates among larger global economies, Refinitv Eikon data show.

The resource-rich region's struggle to tamp down prices, despite the aggressive tightening of monetary policy, sends a warning globally about how tough inflation busting will be. It's also stoking anger and discontent in an already volatile region, which is a key global supplier of copper, corn, wheat and soy

"We're fighting against prices. Inputs are exorbitant," said Argentine truck driver Marcelo Vicente next to a road blockade against rising fuel prices and scarcity of diesel. Truckers are threatening to block exports.

In Ecuador, indigenous groups are leading major protests that have at times turned violent against the government of President Guillermo Lasso, complaining about high food and gas prices. Rising costs have also stoked unrest in Peru.

Central banks have taken note.

The Bank of Mexico on Thursday implemented a record rate hike and signaled more were in the pipeline with annual inflation at a 21-year high. Brazil hiked rates last week and Argentina did a 300 basis point hike to 52% earlier in June.

But inflation has continued to climb, hitting ordinary Latin Americans in a region where labor informality is high, food and fuel make up a huge chunk of family budgets and there is stark inequality.

"Everything has gone up in price, salaries don't stretch far enough," said Andrea Puente, a teacher at a middle school in Mexico City. "Each time you go to the market or the supermarket you can buy less. Everywhere things are more expensive."

'NO MAGIC BULLET'


Argentine President Alberto Fernandez declared "war" against inflation earlier this year. In May, Mexican President Andres Manuel Lopez Obrador laid out a grand plan bring down the price of food staples such as corn, rice and beans. On Friday, he said he would propose crafting a joint anti-inflationary plan to his U.S. counterpart Joe Biden.

In Brazil, President Jair Bolsonaro has also been pushing for a range of inflationary relief measures, including cutting fuel taxes and providing cooking gas vouchers. He's butted heads with state energy firm Petrobras over fuel price hikes. Consumer prices there rose above forecasts in the month to mid-June.

But analysts said there was no easy solution for the region's woes.

"I would not put too much faith that this is going to be a silver bullet to deal with inflation. It's not," Goldman Sachs economist Alberto Ramos, referring to Mexico's anti-inflation push. He added the impact of rate hikes was dampened because there are more people outside formal banking and credit systems.

Supply chain disruptions are hitting nations globally, forcing the U.S. Federal Reserve into a major hike this month. The Russia-Ukraine war has snarled food and fuel supply, while pandemic lockdowns in China have hit shipping.

Fears of a global recession are rising, which is giving investors the jitters who have pulled back from some riskier emerging markets, hurting equities and bonds.

On the ground, many are simply trying to get by day-to-day where the impact of inflation is increasingly visible. In Argentina, inflation is above 60% despite the rate hikes and is expected to top 70% by the end of the year.

"The money we have is just not enough because one day you pay 100 pesos for a liter of milk and another it's 150," said Erica Sosa, a social cooperative worker in Buenos Aires and protest organizer raising awareness of poverty and hunger.

"Every day it's the same. Every day prices rise."

Newsletter

Related Articles

PanaTimes
Close
0:00
0:00
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
Swedish Embassy in Baghdad Engulfed in Flames Amidst a Firestorm of Protests
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
An Ominous Shift in Warfare: Western Powers Risk War Crimes and Violate International Norms with Cluster Bomb Supply to Ukraine
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
×