Imagine you are shopkeeper in Argentina. Now imagine having to adjust the prices of your bananas, oranges, socks, and laundry detergent on daily basis - or more often.
The current inflation crisis is forcing shopkeepers, and everyone else in this country of 40 million, to do just that. Prices rose 33.3% last year. With the official price index at 11% (some peg the real amount at the mid 20% mark), daily price adjustments are an aggravating way of life. Inflation is the decline in money's purchasing power as measured by an official price index. However, what that index states is open to adjustment and interpretation by the government.
Interestingly, the country hosted an International Monetary Fund technical assistance mission this week in order to create a new consumer price index because of widespread public mistrust of the official data.
Another recent response from the Argentine Central Bank was to sell 2.2 billion pesos ($555.5 million) of nobacs in order to curb money
supply and growth, weakening currency and shoring up exports.
Some analysts say the government's measures are "feel-good" only, by reducing unemployment levels (for now), providing pay hikes to unions, and staving off more severe runs on the Argentine Central Bank. But the bank's continuing need to print money does not bode well for the short term, and various critics are starting to use the word "hyperinflation" more frequently as consumers are over-buying as ever-increasing prices force them to take a "now-or-never" look at goods and services.
Indeed, some point to an encroaching inability to print money quickly enough as a sign of pending currency destruction. What is to be done remains in a murky atmosphere of conflicting reports from the government, economics experts, and international lenders.
