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Argentina faces accelerated monthly inflation at 7.1% in July, posing challenges ahead of key elections

Argentina’s monthly inflation rate likely sped back up to 7.1% in July, a Reuters poll of analysts showed, a blow for the ruling Peronist coalition, which is battling to avoid defeat by the conservative opposition in primary elections on Sunday.

The sharper expected rise in the Consumer Price Index (CPI) would halt a run of slowing monthly inflation readings since a peak of 8.4% in April and underline how hard to budge inflation has become in the embattled South American nation.

Argentina has one of the highest inflation rates in the world, with the annual reading near 116%, which hammers earning power, has forced the government to hike the interest rate to 97%, and seen it burn through dollars to protect the peso.

“The monthly increase exceeded that of June, in part due to a spike in tourism linked to the winter holidays, which saw big moves in recreation (prices) in the month,” said consultancy C&T Asesores Económicos.

The projections from 19 local and foreign analysts ranged from a minimum 5.9% rise to a maximum 7.9% jump in the month.

“There are several factors that we believe mean CPI will continue to accelerate in August,” said Eugenio Marí, chief economist of the Libertad y Progreso consultancy, citing market imbalances, government money printing and new taxes.

Argentina’s INDEC statistics agency is expected to publish inflation data next week after the primaries. The central bank has postponed the regular publication of its monthly market analyst survey until after the election.

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