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Argentina is dealing with one of the highest rates of inflation in the world

MARY LOUISE KELLY, HOST:

The prices consumers pay in the U.S. are still going up at an annual rate of about 6%. Now consider Argentina, where annual inflation has topped 100%, according to figures released yesterday. It's one of the highest inflation rates in the world, and recession seems inevitable, as NPR's Carrie Kahn reports.

CARRIE KAHN, BYLINE: Alberto Montewam was thrilled his hair salon in the upscale Palermo neighborhood of Buenos Aires survived the pandemic.

ALBERTO MONTEWAM: (Speaking Spanish).

KAHN: "Everyone was cutting and coloring at home," he says, "but at least they came back once a month, usually in a panic."

MONTEWAM: (Speaking Spanish).

KAHN: "They would say, help me. Look what I did to my hair. Fix it," he laughs. But the 51-year-old says he's not so sure he'll survive triple-digit inflation.

MONTEWAM: (Speaking Spanish).

KAHN: "We can't just raise prices. We understand what the people are going through," he adds. Shanira Sason says she dreads the end of the month when her bills come due.

SHANIRA SASON: (Speaking Spanish).

KAHN: The 41-year-old mother of two grabs a coffee with her kids at a sidewalk cafe. She knows she's better off than most, but, she says, you never know how much your electricity bill will be or how much her kids' school tuition will go up. And it does every month. She says it's all stressful, especially keeping track of all the new taxes and exchange rates levied by the government.

SASON: (Speaking Spanish).

KAHN: "There are different rates, like the blue one and the Qatari rate," she says, shaking her head. In its attempts to curb inflation, the government of leftist President Alberto Fernandez has capped prices and taxed others, especially transactions in dollars. They've been given colorful names. Blue refers to the black-market rate, about three times the official one, and the Qatari rate is the tax on airline tickets. Many Argentines flew to Qatar for this year's World Cup.

DANIEL KERNER: The population doesn't really trust or have any confidence on its own currency.

KAHN: Daniel Kerner is an analyst with the political risk Eurasia Group.

KERNER: The peso exists, but people think in dollars. Most big economic transactions are done in dollars. So it is a de facto dollar-rise economy.

KAHN: And it's an economy that is exacerbating inequality. Nearly 40% of Argentines now live in poverty. Successive governments, both left and right, have failed at economic policies and, in the end, resort to printing more money, which leads to higher inflation.

(SOUNDBITE OF CARLOS GARDEL SONG, "EL CHOCLO")

KAHN: On downtown's Florida Street, the dollar is dominant. While a couple dances the tango for tourist tips, you can hear the money changers too.

UNIDENTIFIED PERSON: (Speaking Spanish).

KAHN: Cambio exchange, they call out, not very loudly. Officially, Argentines are limited to changing the equivalent of $200 a month. On Florida Street, there is no limit, and that's critical if you're doing business with Denise Ardjian. She's a real estate broker, and she says she doesn't accept pesos.

DENISE ARDJIAN: (Speaking Spanish).

KAHN: "Simply," she says, "because the dollar is stable. The peso isn't."

Carrie Kahn, NPR News, Buenos Aires. Transcript provided by NPR, Copyright NPR.

Carrie Kahn is NPR's International Correspondent based in Mexico City, Mexico. She covers Mexico, the Caribbean, and Central America. Kahn's reports can be heard on NPR's award-winning news programs including All Things Considered, Morning Edition and Weekend Edition, and on NPR.org.