Argentina's Inflation Rate Hits Highest Level of Macri Era

(Bloomberg) -- Consumer prices in Argentina rose at their fastest pace in August since the nation’s statistics agency regained credibility in 2016, another sign that South America’s second-largest economy is heading for a recession this year.

Inflation reached 3.9 percent in August from July, the fastest pace the agency, known as INDEC, has reported since President Mauricio Macri overhauled it. The agency was widely discredited before that, with the previous government accused of fibbing the numbers. Prices rose 34.4 percent compared to a year ago, according to data published Thursday.

The figures were released just an hour after the peso closed at a record-low of 39.55 per dollar, which is likely to further fuel inflation. A drought, rising U.S. interest rates, policy errors and communication missteps have pulled Argentina toward recession this year.

Inflation, economic growth and the peso’s performance are expected to worsen more. Economists see inflation reaching 40 percent by the end of this year, and the economy contracting nearly 2 percent, according to the most recent central bank survey. That’s a far cry from the projections of 3 percent growth and 19 percent inflation made at the beginning of the year. The peso is already down 50 percent this year, the worst-performing currency in emerging markets.

©2018 Bloomberg L.P.