Inflation Hits 124.4% in August 2023, Argentina on the Brink of Bankruptcy

Argentina's inflation reached 124.4% year-on-year (yoy) in August 2023, the highest since 1991.

According to Reuters, monthly inflation rose to 12.4% in August 2023. This figure remains high even compared to the annual inflation of most countries worldwide.

As shown in a graph from Trading Economics, Argentina's annual inflation has been alarming since last year, reaching 83% in September 2022. Inflation then entered triple digits, reaching 102.5% in February 2023.

Over the year, Argentina's inflation decreased once, from 115.6% in June 2023 to 113.4% in July 2023. However, it surged again in August 2023.

This difficult situation has driven poverty rates to over 40%. This crisis has sparked anger among the public and political elites, especially with general elections approaching in October.

(Read also: 10 Countries with the Highest Inflation in 2022)

Some citizens report having to strategize by shopping around to find the cheapest prices. A South China Morning Post (SCMP) interview with a resident mentioned that they had become a "vegan," reducing meat consumption due to its soaring price. If they can afford it, people share what little they can buy.

A survey of analysts at the country's central bank predicts inflation will exceed 169% by the end of the year, a sharp increase from the previous estimate of 141%. Analysts also forecast monthly inflation of 12% in September and 9.1% in October.

The SCMP states that Argentina is trapped in a cycle of economic crisis. A series of events—loss of confidence in the peso leading to continuous depreciation, triple-digit inflation, negative central bank reserves, and a sluggish economy due to drought affecting the agricultural sector—are worsening the living conditions of its citizens.

The country is also on the brink of bankruptcy due to significant debt. Argentina previously agreed to a US$44 billion debt with the International Monetary Fund (IMF) and faces a US$16 billion legal bill following a US court ruling related to the nationalization of the YPF energy company a decade ago.

(Read also: List of Countries with the Highest Food Inflation in the World in May 2023)