Life in a place where inflation is more than 100%

Prices in Argentina, where inflation is more than 100%, vary from day to day, and the peso depreciates to the point where people can't put pocket money in their pockets because it's too much.

Few people know what $220,000 in cash looks like. But Ana (50 years old) is very clear. She brought a bag of savings in USD to buy land to build a house in Patagonia (Argentina), no deposit, no installment. Inside the backpack are 22 piles of 100 USD currency stacked on top of each other.

"There is no bank loan here. I saved 20 years to buy that land," the former preschool teacher said on the website. ABC News . In Argentina, most people buy houses with cash.

When asked about the safety of such a large cash transaction, Ana said: "It's always risky."

According to ABC News , this is just one of the strange stories in an economy that is experiencing more than 100% inflation. - the highest in 32 years. The biggest problem right now is that nobody seems to care about the price of things anymore.

Prices here increase daily, so much so that at the end of the day, many people don't even know how much this item costs. "You never shop in one place. You compare five or six supermarkets. It's like a treasure hunt, going here to buy eggs, going there to buy laundry detergent. But in the end, you I still have to buy it because I don't know if it's expensive or cheap," said Guido Mazzei, 39, manager of rental apartments in Buenos Aires.

Crowded scene at a market in Argentina. Photo: ABC News

For sellers, life is not easier. Every month, Rudy Rindlisbacher - owner of a steel company in the city of Trenque Lauquen - talks with his son to adjust product prices.

"It's complicated. Because there's no way of knowing how much the product will cost at the time of import. Big companies can keep the goods, not put on the shelves until they know the cost of re-import. But business Small businesses like us have to sell continuously. We need to live," he said.

Before the Great Depression of the 30s of the last century, Argentina was also in the group of 10 countries with the highest GDP per capita in the world. However, since the 1950s, the country has been in recession and defaulting on its debts.

Over the past 50 years, Argentina has regularly struggled with rising prices. In the 1980s, inflation here reached an unimaginable 3,000%. Since 2008, the country has recorded inflation above 30% per year.

Argentines spend pesos as soon as they receive them. They don't trust banks, rarely use credit cards. And after years of inflation, they also forget what prices everything should be. Millions of Argentines have come to the black market to circumvent the government's laws to buy dollars.

Inflation in Argentina has the same cause as the rest of the world. It's the war in Ukraine, supply chain tensions and a sharp increase in public spending. However, many economists say the problem lies with the country itself. The country is spending more than it collects. Health, education, energy, public services here are heavily subsidized or free. So, to make up the shortfall, they increased the printing of pesos.

By 2022, the country's Economy Minister - Sergio Massa - has pledged not to ask the central bank to print more money to serve public spending. The Central Bank of Argentina earlier this week also raised the reference interest rate to 97% to deal with inflation.

The 1,000 peso bill is currently Argentina's highest denomination bill. Photo: ABC News

Analysts are still divided on how to deal with the problem in Argentina. But most agree that the country lacks political will. "Understanding the social side of this is very important. Unfortunately, Argentina has such a long history of inflation that generations of people consider 30% inflation normal," Adam Fabry – Lecturer economist at the National University of Chilecito commented.

However, Benjamin Gedan, Project Manager for Argentina and Latin America at the Wilson Research Center believes that triple-digit inflation will be a landmark for this economy. "It's true that Argentines are used to high inflation, but it's only 20-30%. The current 100% really turns life upside down," he said.

Gedan said restaurants in Buenos Aires are often full, not because people are rich, but to 'quema la plata' (burn money). A lot of Argentinians are spending money as if the end of the world is coming. They buy everything from face towels to TVs by installments.

"Homes are bought with cash, paid off in one go. But small items are bought in monthly installments over many years," Guido said. The reason is that the Argentinians think that the price of pesos will fall and their final installments are of very low value, if converted into USD.

Rudy bought a Toyota HiLux 1.5 years ago for 4.5 million pesos. Currently, its price has reached 12 million pesos. "The best way to save money is to buy stuff," he says.

To deal with inflation, Argentines seek to hoard USD. Many experts believe that Argentines hold more dollars than any other country in the world besides the US. "It's not just rich businesses, taxi drivers, grocery store owners who also hold dollars," Gedan said.

These USD bills are not kept in the bank, because at the official exchange rate, they will be worth only half. Argentinians keep them in old clothes, under mattresses, in walls, floors, and safes. The largest denomination note in Argentina - 1,000 pesos - is currently priced at less than 2.4 dollars on the black market. In February, Argentina's central bank said it planned to launch a 2,000-peso note.

For Rudy, it was also difficult to fit enough pesos to spend the day in his pants pocket. "A pile of money with little value," he complained.

In recent years, more and more Argentines have sought to emigrate abroad. "Most of my friends and relatives will leave Argentina. We are also applying for Italian citizenship. I want my children to grow up in a better place," said Vanesa Barrios, director of a service provider company. climbing service in Mendoza said.

However, not everyone can afford to go abroad. The group most affected by inflation are the poor. "They don't have unions, work in informal occupations, and can't negotiate salaries. Inflation makes their earnings evaporate in the blink of an eye," Gedan said.