(Bloomberg) -- Inflation in Argentina continued to accelerate more than expected into triple-digit territory in April as a peso selloff triggered by devaluation fears drove costs ever higher.
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Consumer prices in April rose 108.8% from a year ago, the highest annual level in three decades and more than economists’ expectations. From a month ago, prices rose 8.4% in April, well above economists’ forecasts for a 7.5% print, according to government data published Friday afternoon.
Food prices, the largest weighted category in Argentina’s index, jumped 10.1% from a month earlier. Clothing, restaurants, hotels and home goods were also above the headline figure. Only one category, alcoholic beverages, showed prices rising less than 5% on a monthly basis.
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Inflation fears boiled over last month as prices spiked in March, exacerbating a vicious cycle where the peso suffered a sharp 13% selloff in parallel markets. That slump prompted some Argentine savers to withdraw over $1 billion of dollar deposits, or 6.7% of the total, from the banking system last month. The peso volatility helped to fuel additional price hikes during April.
Facing a rapidly worsening outlook, officials in Buenos Aires are seeking to renegotiate Argentina’s $44 billion program with the International Monetary Fund, hoping to receive more money up front. However, the government isn’t complying with some of the key targets in the program that are usually a benchmark for the IMF to approve any funds.
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Argentina’s inflation crisis is playing out before presidential elections in October with economists anticipating a steep recession this year due to ever rising prices and a historic drought that’s ruining essential crop exports. The economy is expected to contract 3.1% this year, according to the central bank’s latest monthly survey.
President Alberto Fernandez, who has already announced that he won’t seek a second term against the current economic backdrop, has resorted to currency controls and price freezes. More recently, he’s had his regulators intimidate investors and analysts in the local market in an unsuccessful bid to cool prices. His ruling coalition hasn’t yet announced a presidential candidate.
--With assistance from Rafael Gayol.
(Updates with detail from inflation report in the third paragraph)
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