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President Javier Milei

Photo: Tomás Cuesta / POOL / EPA

The annual inflation rate in Argentina has risen to 254.2 percent. In January, prices rose by 20.6 percent, according to the national statistics agency Indec in Buenos Aires. The South American country is suffering from a severe economic crisis.

In particular, the costs of personal care products, transport and communication rose sharply and had an impact on the inflation rate. This means that the year 2024 began in Argentina with the highest inflation rate since the hyperinflation of 1991.

Inflation in Argentina is one of the highest in the world. South America's second largest economy suffers from a bloated state apparatus, low industrial productivity and a large shadow economy that deprives the state of a lot of tax revenue.

The new ultra-liberal President Javier Milei wants to get Argentina back on track with a radical austerity program. The government sharply devalued the local currency, the peso, and announced cuts to subsidies on gas, water, electricity and public transport, which is likely to further fuel prices.

40 percent of the population is below the poverty line

Milei's plans have caused heated arguments. Trade unionists and socially committed activists fought violent street battles with security forces at the beginning of the month during protests against the president's plans. Demonstrators hit officers with sticks, and police fired rubber bullets and tear gas into the crowd.

Milei's party does not have its own majority in parliament; the president would prefer to be given special powers in the event of an economic emergency. The scope and extent of privatization of state-owned companies as well as deregulation and austerity measures in areas such as the electoral system, pensions, education, culture, criminal and family law are also causing dispute.

Around 40 percent of people in the once prosperous country live below the poverty line. The national currency, the peso, continues to lose value against the US dollar and the mountain of debt is constantly growing.

mamk/dpa-AFX