With prices rising over 200% last year—the greatest level in three decades—Argentina has unsulliedly surpassed Venezuela to become the Latin American nation with the highest inflation rate in 2023.

The South American grain producer said on Thursday that prices had increased by 25.5% in December alone, for an annual inflation rate of 211.4%.

The Venezuelan Observatory of Finance, an NGO, reports that despite years of economic hardship and over a million percent inflation in 2018, consumer prices in Venezuela increased by an estimated 193% last year.

Although official Venezuelan inflation data is in doubt, consulting firm Ecoanalitica projects a 170% increase in prices. November’s monthly inflation, according to Venezuela’s central bank, was only 3.5%, marking the ninth straight month of single digit inflation.

In an attempt to put a lid on consumer prices, Venezuela’s socialist government has eased import restrictions, eased currency controls, and promoted informal dollarization in recent years, all of which have contributed to a slowdown in inflation.

In the meantime, Argentina’s CPI increases have quickened recently due to consistent large budget deficits, low confidence in the local currency, and central bank money printing to support excessively leveraged governments.

Libertarian Javier Milei, the recently elected president of Argentina, has issued a warning over the possibility of hyperinflation and is promoting significant changes along with stringent austerity measures to control costs.

According to analysts, if Milei is successful, the inflation rate convergence with Venezuela might not last long.

“Venezuela does not have any proper fiscal consolidation strategy,” said Peter West, a London-based economic adviser at EM Funding, which specializes in investment strategies.

“In contrast, Argentina now has a rigorous stabilization program, based on a strong fiscal anchor and backed by the IMF (International Monetary Fund),” he said, though cautioned Milei faced “high” risks about putting his plans into action.

(Adapted from Reuters.com)