AP reports:
Argentina announced a two-month price freeze on supermarket products Monday in an effort to break spiraling inflation.
The price freeze applies to every product in all of the nation’s largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies’ trade group, representing 70 percent of the Argentine market, 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.
This was not hard to see coming. Following up on a detailed WSJ report on Argentina, I wrote in April of last year:
Two women have taken control of Argentina’s central bank and are about to use it as if they are on a weekend shopping spree. Cry for Argentina.
In June, I wrote:
The Argentine central bank, under the supervision of Mercedes Marcó del Pont, is pumping out pesos at a rate that may ultimately result in the destruction of the currency.
The spending spree is now going to lead to even more bad consequences. The price controls just announced will result in shortages and even more pain for the people of Argentina.
This is what Krugman wrote in May sandwiched in between my April and June warnings:
Matt Yglesias, who just spent time in Argentina, writes about the lessons of that country’s recovery following its exit from the one-peso-one-dollar “convertibility law”. As he says, it’s a remarkable success story, one that arguably holds lessons for the euro zone.
Some success story: out of control inflation. It will happen in the United States next, if the Federal Reserve continues to follow the mad dog printing advice of Krugman.
Source: Economic Policy Journal.
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