Money, Jobs and Technology

Inflation in Argentina

Mike Rizzo

By | June 9, 2010 | 5 comments

argentina inflation

I must admit that I feel like my grandfather when I say, “Yes, I remember the day when a Fernet and Coke was just 8 pesos.”

Unlike my grandfather who is referencing the 1930s when talking about prices, however, I am referencing 2006. For those of you have been in Argentina for a couple years, you, too, have reminisced about the golden days of ridiculously inexpensive prices. While prices in Buenos Aires are still very much a bargain when compared to those in the US or Europe, the average gringo can no longer spend money like Mike Tyson after his first payday. Many of us have only read about inflation in text books, but inflation in Argentina is very real, a fact of life to which one is forced to adapt.

Truth is, inflation is as old as paper money. In the 1920s, the German Reichsmark went from an exchange rate of four per dollar to four trillion per dollar. It was so valueless that it was used as wall paper and as fire kindling. In 1981, Argentina had a $1,000,000 note and prices changed by the minute. Argentines have told me jokingly (or maybe not) that they would drink in the morning because by the evening the price of beer would be more expensive. And even more recently, Zimbabwe has been experiencing an inflation rate of 13.2 trillion percent per month.

It’s hard not to let out a chuckle when thinking of people using banknotes for wallpaper and a Coca-Cola costing $1,000,000,000,000 Zimbabwe Dollars. However, inflation is no laughing matter, as it leads to serious human suffering. Demoralized Germans fell for a charismatic megalomaniac, an out of control currency which helped provide fertile grounds for a golpear militar in Argentina, and Zimbabweans are currently experiencing a surge in brutal violence.

Inflation leads to civil and political unrest for a variety of reasons. In short, peoples’ savings decline in value as inflation increases. Therefore, their purchasing power for goods is reduced (that 1 peso which used to buy an empanada, now does not). In other words, as inflation increases, citizens become poorer. Even worse, inflation acts as a regressive tax, as the lower classes are most affected by rising prices. Salaries never rise as fast as inflation. When poor families experiences an increase in costs for basic goods, such as food, but do not receive an increase in their pay, the result can be hunger and stress. These conditions eventually lead to public uprisings and demonstrations of civil discontent.

According to the Argentine government, however, inflation was only a little over 8% last year. Hardly a worry, if the figure was factual. The government’s inflation statistics have become quite controversial, not only among tie-wearing economists, but also among common porteños. In fact, you can often find groups protesting the fuzzy math of the official statistics bureau of the Argentine Government (El Instituto Nacional de Estadística y Censos, or INDEC) demonstrating directly outside of their headquarters (located at Julio A. Roca 615, Capital Federal). Since INDEC’s inflation statistics are only useful for comedic purposes, independent organizations have been tracking inflation and put the figure closer to 27% for 2010. If you’re interested in learning more for yourself, check out www.inflacionverdadera.com, a site that tracks daily prices throughout Argentina.

Some tips for beating inflation:
Take public transportation whenever possible. The subte costs $2.50 pesos and colectivos cost, at most, $1.25 (see Will Betton’s articles on Buenos Aires’s colectivos). Prices of cabs have skyrocketed while subsidized public transportation has stayed fairly stable.

If you like to drink, it’s also a good idea to pre-game before you go out. Drink prices are stiff at bars and boliches (dance clubs), and can cost as much per drink as a bottle would from your local corner shop.

It is also a good idea to venture beyond the typical tourist zones of Palermo, Belgrano, Recoleta and San Telmo. Other neighborhoods that do not cater to tourists, such as Flores or Chacarita, are not as overpriced and often more interesting than their often-trodden counterparts (for more, check out the Neighborhood Guide).

These are just a few suggestions, but we would like to hear yours. Please feel free to leave your comments in the forum below and share new strategies to beat inflation and better enjoy your time here in Buenos Aires!

Mike Rizzo
LPBA Staff

Wow! Don't forget to check the 'Activities you might like' right here

SO FAR, THIS ARTICLE HAS 5 COMMENTS!

  1. Fred

    23/06/2009 - 2:41 am

    You can buy now and in bulk to beat inflation by going to mercado central, or to Vital, kinda like a Costco, and share the savings with others by splitting purchases. I never understood why we need to waste all that money on INDEC, when we know what inflation is by checking the Ugi's Pizza price posted on the wall…
    Fred

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  2. Fred

    23/06/2009 - 6:27 pm

    Their website is http://www.vital.com.ar/ Enjoy…Fred

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  3. meaty

    29/06/2009 - 1:28 pm

    i want to steal those monedas from that foto

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  4. Fred

    08/07/2009 - 3:51 am

    Banks have been loosing up on monedas it seems, I just got 10 from 2 banks each, much more than before. I'm offering to change 10 Monedas at par for any ride with my Lincoln Town Car company here! Also, the Monedero card is a great solution to the problems. And as far as inflation, wondering what the author/others think of going to a gold and silver standard, the way the US started off?
    Fred
    http://www.silverstarcar.com

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  5. Maya

    23/06/2009 - 12:39 pm

    Where is Vital?

    Reply