A coffee for $3.50: Argentina is the most expensive country in Latin America
A price comparison with Brazil, Mexico, Colombia and Chile shows the consequences of using the exchange rate as a strategy against inflation
Argentina’s President Javier Milei, towards the end of 2023, would often repeat that the peso, the national currency, “is worth crap.” He was campaigning for the presidency and still proclaimed dollarization and the closure of the Central Bank as the only possible remedy against inflation, which at that time was flying above 10% per month. A little more than a year later, Milei had reduced inflation to below 3% per month, but he did not dollarize, he did not close the Central Bank, and the peso is no longer “crap.” The formula applied by Economy Minister Luis Caputo was more orthodox: zero emission and exchange rate delay. That is, he gradually emptied the market of pesos and kept the dollar’s price at bay with an exchange rate that rises at a rate of 1% per month, in addition to setting up obstacles to the free exchange of currencies, the so-called “cepo.” The collateral damage of the strategy was a surge in prices when measured in dollars, because inflation in pesos, although it has fallen, has not been halted. Any foreign tourist passing through Buenos Aires can attest to this. Today, a cup of coffee in a bar in the Argentine capital costs the equivalent of about $3.5, compared to $1.5 in Bogotá or São Paulo or $2.5 in Mexico City or Santiago.
