Argentina will freeze prices on dozens of staple products, including rice, sugar and milk, in a bid to rein in rampant inflation and support hard-hit consumers ahead of national elections at the end of the year. The government said on Wednesday it had agreed with retailers to fix prices on 60 "essential" products for at least six months, and that it would hold public service prices steady for the rest of the year.
The president, in comments circulated by his office, said that running a country required "battles every day" and that "the battle against inflation is the most important." The measures come after inflation sped up to 4.7 percent in March and was running at a 12-month rate of almost 55 percent, a trend that has sapped people's spending power and hammered President Mauricio Macri in the polls.
Staples that will have their prices frozen include cooking oils, flour, yogurts, jams, biscuits and Yerba mate tea, a ubiquitous beverage in Argentina sipped through a metal straw.
There were also separate measures to help keep domestic meat prices low. "In this period where we have a temporary acceleration in inflation, it's very important to bring relief to Argentine families," Argentine Treasury Minister Nicolas Dujovne told reporters on Wednesday, adding that inflation was at a "peak."
Macri will seek re-election later this year, but is facing flagging popular support as he seeks to restore growth in the country, rein in inflation that rose 50 percent last year, prevent a run on the peso currency and halt a rise in poverty. Thomaz Favaro, regional director for consultancy Control Risks, said the price freezes reflect the government's concern as it looked to win back wary voters. But he said the measures were generally an inefficient way to temper inflation.
"We're likely to see a much more populist face of the Macri administration, with short-sighted measures to build political capital ahead of the elections," he said.
The country's major cities have regularly seen protests against rising prices and hikes to public utilities, which have climbed sharply as the government has cut back on once-generous subsidies as part of a deficit reduction program.
The latest measures by the government also come on the heels of new central bank measures announced on Tuesday, aimed at tempering inflation and supporting the peso. The currency strengthened 2.42 percent on Wednesday to 41.40 per US dollar, traders told Reuters.