Panic buying and hasty price hikes amid political crisis

A political crisis in inflation-ravaged Argentina that was sparked by the economy minister’s resignation has spooked markets and generated fears resulting in panic buying and hasty price hikes, as the informal exchange rate soars, AFP reported.

“Every day it’s like going out to hunt a lion,” Luis Sacco told AFP in front of his electronics store in the capital Buenos Aires.

Since Monday, prices have risen dramatically at shops and businesses across the country.

On Saturday, economy minister Martin Guzman resigned following months of pressure from inside President Alberto Fernandez’s center-left Frente de Todos (Everyone’s Front) governing coalition.

Guzman was the chief negotiator in Argentina’s haggling with the International Monetary Fund to restructure a $44 billion debt.

But he was collateral damage in a power struggle between Fernandez and his vice-president, the former president Cristina Kirchner.

Opposition to Guzman’s fiscal policies from the former president’s influential faction within the coalition resulted in him quitting and being replaced by Kirchner loyalist Silvina Batakis.

She is the one who must now steer agricultural powerhouse Argentina through its years-long economic crisis.

Inflation, which surpassed 60 percent in the last 12 months, is hurting ordinary Argentines, who have been gripped by the political soap opera.

“It was the longest Sunday of my life,” said Sacco, the electronics store owner who spent an anxious weekend “not knowing whether or not to lift the shutters, (and) a Monday thinking about catastrophe.”

The black market peso briefly dropped from 239 to the US dollar to 280 on Monday before stabilizing at 250. The official exchange rate is 132.

But amidst the uncertainty and panic, sales actually soared for many businesses with consumers afraid prices would soon increase.

That is a major concern in a country struggling with years of high inflation.

“There was no earthquake. There are sales, more than ever,” said Sacco.

But “people are also buying because they know that if they wait, the price will increase. It’s the time to sell stock.”

He pushed up his prices by 15 percent a few weeks ago, with another five percent increase this week, while he has now hiked prices on his imported goods by 30 percent.