Argentina’s Inflation Surges to 138% Ahead of Presidential Election

(Bloomberg) -- Inflation in Argentina jumped to its highest level in three decades, underscoring the extent of the economic crisis that will confront the winner of the country’s presidential election.

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Consumer prices rose 12.7% in September from a month earlier, above economists expectations for 11.5% and the second straight double-digit monthly increase. From a year ago, inflation accelerated to 138.3%, the highest level since the early 1990s when Argentina was exiting hyperinflation.

Read More: Argentine President Files Complaint Against Milei Before Vote

Clothing and recreation led all price increases in September, the first full month of data after the government devalued the currency 18% on Aug. 14. Investors in Argentina are already anticipating another devaluation before the end of the year with futures contracts pricing the currency at 800 pesos per dollar by December, which would be up from the current 350 per dollar.

Inflation is voters’ top concern before they cast their ballots on Oct. 22 in a wide-open election. Outsider candidate Javier Milei won the August primary, but coalitions for rivals Patricia Bullrich and Sergio Massa finished in a close second and third, effectively making it a three-way race. They’ve all pledged to cut spending to close Argentina’s chronic fiscal deficit, a key element stoking inflation.

Read More: Argentina’s Black Market Peso Rate Tops 1,000 Per Dollar (1)

Milei drew the ire of banks, investors and politicians earlier this week by encouraging Argentines to stop saving in pesos, remarks seen as a driver behind the peso’s selloff in the black market where one dollar is now worth more than 1,000 pesos. President Alberto Fernandez, who isn’t seeking reelection, even filed a legal complaint against Milei for the comments.

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