Argentina puts freeze on prices in bid to break inflation spiral
APBUENOS AIRES--Argentina announced a two-month price freeze on supermarket products Monday in an effort to stop spiraling inflation.
February 6, 2013, 12:03 am TWN
The price freeze applies to every product in all of the nation's largest supermarkets — a group including Wal-Mart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies' trade group, representing 70 percent of the Argentine supermarket sector, reached the accord with Commerce Secretary Guillermo Moreno, the government's news agency Telam reported.
The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1.
Polls show Argentines worry most about inflation, which private economists estimate could reach 30 percent this year. The government says it's trying to hold the next union wage hikes to 20 percent, a figure that suggests how little anyone believes the official index that pegs annual inflation at just 10 percent.
Economist Soledad Perez Duhalde of the abeceb.com consulting firm predicted on Monday that the price freeze will have only a very short-term effect, and noted that similar moves in Argentina had failed to control inflation. Consumers shouldn't be surprised if the supermarkets are slow to restock their shelves and offer fewer products for sale, she added.
A more effective way to contain inflation would be to “reduce government spending, which is financing an expansion of the money supply, and to have a credible price index.”