Argentina’s year-over-year inflation was 193% in October, and that was an improvement.
I step out onto the busy street where I live in Buenos Aires and immediately dodge a dog walker.
He’s walking not one or two, but 13 dogs. They take up the entire pavement.
One begins barking at something. The dog next to it vigorously joins in. Like canine dominoes, all 13 dogs begin having a barking meltdown. It echoes across the tree-lined streets; locals barely notice.
This is what extreme inflation sounds like: dog walkers taking on more than a dozen dogs to earn the same amount of buying power as they used to earn for just a few dogs. As one dog walker told The Guardian: “I can’t keep increasing the price of my service because I’ll lose clients.”
Argentinians are making such calculations daily due to living for so long with astronomical inflation. In October, the year-over-year inflation rate was 193%, according to INDEC, Argentina’s national statistics agency, and that was actually the country’s lowest rate in nearly a year. Wages have grown at a comparable clip to inflation this year, but the steep increases make everyday financial decisions unpredictable.
Inflation in Argentina involves not only stressed-out dog walkers, but huge wads of cash stuffed into backpacks, ever-changing menu prices, and an illegal trade of US dollars.
Ingrained inflation
A year ago, I moved from a country with one of the world's richest and most stable economies (Australia) to the country with the world's highest inflation rate: Argentina.
In Australia, newspapers literally run stories asking, why are we so rich? Recently, Australian broadcasters panicked that, next year, “our inflation rate could have a three in front of it.” I’d gotten so used to triple-digit figure inflation here in Argentina, I had to check if they meant three hundred.
But the projected figure they’re worrying about is 3.7%, a rate Argentinians could only dream about. Australia’s current YoY inflation rate is just 2.8%.
The Hustle
That’s not to diminish the economic concerns of Australians — especially those financially struggling in a country where the cost of living was already relatively high.
But Argentina, one of the world’s richest countries about 100 years ago, has inflation problems that few other places can comprehend. Economists say Argentina’s inflation dates back to the policies of Juan Perón, who was president from 1946 to 1955 and 1973 to 1974. His policies — which included nationalizing production, boosting wages, and increasing welfare payments — were largely paid for by printing money, a cause of runaway inflation.
This practice continued for decades because Peronist candidates won the majority of elections and continued such expensive policies.
“Argentina has financed public expenditure via direct transfers from our central bank to the Treasury, meaning it’s printing more and more banknotes and devaluing the peso,” says Fernando Cirelli, an economics professor at Columbia University who regularly visits Buenos Aires.
Facing this bout of inflation, Argentina’s poverty rate was 40% last year. This year, it rose to 50%. (It doesn’t help that inflation for rent and utilities is even worse than overall inflation, clocking in at 286% YoY in October 2024.)
And even for people with higher incomes, life has hardly been normal. Argentina’s inflation means “visiting three or four supermarkets to discover exactly which is cheaper this week,” says Cirelli, who does this himself.
Prices outside of a Buenos Aires grocery store. (Cristina Sille/Picture Alliance via Getty Images)
I’ve noticed that prices change so often — every week, typically — that restaurants almost all have migrated their menus to QR codes or Instagram.
Every morning I have a barista-made flat white coffee at my local coffee shop, ‘Fruto.’ Earlier this year, in February, it cost the equivalent of $2.83 USD, but prices went up to $3.54 by August, and then $4.67 by November — a 65% increase over 10 months.
My launderette is the same story, with incremental rises leading to a single bag of laundry costing twice as much over a few months. The owners have even stopped bothering to write the prices on the store’s whiteboard because they’ve changed so often.
Meanwhile, my rent has increased twice this year: from $470 to $500 (+6%), then to $550 (+10%) a month. (I’ve since signed a longer lease to prevent this from happening.)
To make things more complicated, my landlord, like many people and businesses charging high amounts, expects to be paid in cash in US dollars because Argentina’s national currency, the peso, loses value so rapidly. (Supermarkets, restaurants, and other businesses that sell everyday products typically still accept pesos.)
And exchanging pesos for USD is a bewildering task.
Cuevas and money dealers
The Argentina government tries to control the outflow of foreign currency with restrictions, and such controls have led to the coexistence of different exchange rates for the US dollar.
- These exchange rates include the dólar oficial, dólar turistica, and dólar MEP. People tend to get paid in Argentina pesos at the dólar oficial rate, then try to get better purchasing power by converting it to the dólar MEP, which is done through the buying and selling of bonds electronically — most Argentinians have an app for this.
The Hustle
But most everybody wants to get the dólar blue, a black market exchange rate that was worth almost twice the dólar oficial rate when I moved to Argentina a year ago. When you buy or sell a house, a car, or something of great value, such as a computer or cell phone, this quote is used.
To get the coveted dólar blue rate, Argentinians must physically exchange pesos for dollars in person. Many people go to cuevas, where they’ll find money dealers. Some of these money dealers ride motorcycles to their clients’ houses. Other Buenos Aires residents visit Florida Street, which is full of shops and vendors who’ve taken in US dollars from tourists.
On this pedestrian-filled thoroughfare, cueva operators say, “Cambio? Cambio? Cambio?” every few meters. If they catch your eye, they’ll beckon you to offer you their dólar blue rate. If you accept, they’ll guide you to a clandestine cueva where the money deal can be made, sometimes a small office tucked away within a shopping center or at the back of a florist.
The exchange rates don’t always make sense: You get more pesos for a newer $100 USD note than an old one. These exchanges are technically illegal, but this black market is tolerated and at least half of the country reportedly does it. After police have strolled through Florida Street, cuevas pop straight back up.
To pay off my landlord and obtain cash for other expenses, I go to Western Union to have money transferred from my Australian bank account to pick up in pesos. Until very recently, the largest banknote was for 1k pesos (worth around $1 in the dólar blue exchange rate). I’d bring a big backpack to Western Union just to cart them all home and then call my cueva — introduced to me by my landlord — to come over on his motorcycle to deal me USD.
A stack of Argentina pesos to cover four months of rent worth about $2k USD. (Gary Nunn)
I save the rest of my pesos for smaller, everyday expenses, but not at a local bank. My apartment, as well every apartment I toured, had an in-built safe for storing money; few trust the banks because during the 2001 financial crisis the government froze bank accounts.
Sometimes I have to return to the safe half way through my day to refill my deflated wallet and make it fat with pesos again.
Inflation reprieve
There was good news earlier this fall in Argentina. Inflation reached its lowest monthly increase since late 2021 in September. In October, the month-to-month inflation rate fell under 3%.
Cirelli says this is a “huge victory” for Argentina president Javier Milei, who was elected last year after posing on the campaign trail with a chainsaw that represented the cuts he intended to make. “The question remains how sustainable that is,” Cirelli says.
Milei has lowered the inflation rate by stopping the source of inflation: money printing, which was achieved by drastically cutting government expenditure and subsidies.
- Since he took office in December last year, Milei has shuttered 13 ministries and fired some 30k public employees, the equivalent to almost 10% of the federal workforce — a decision that has led to protests and strikes.
- He has also cut subsidies in public transport, causing train and bus fares to spike.
Overall, though, prices are trending downward, and the dólar blue black market exchange rate is falling closer to the official exchange rate — even if these declines aren’t obvious on the ground.
The Hustle
Some landlords and big businesses have been able to withstand higher expenses by charging higher prices. But for everyday people and entrepreneurs the struggle is harder. Local business owners have chosen to raise prices modestly rather than rapidly, preferring to make less money but keep loyal customers.
It’s a fine balance that can lead somebody like a dog walker to take on more animals rather than jack up their rates. Now, every time I hear a dog howl, I’m reminded of the pain points of inflation.
