Argentina Economy Can’t Take 40 Percent Inflation: Massa

Argentine Presidential Hopeful Sergio Massa
Argentine legislator Sergio Massa, right, listens to President Cristina Fernandez de Kirchner speak at the Congress in Buenos Aires, Argentina, on March 1, 2015. Photographer: Juan Mabromata/AFP via Getty Images

Inflation of as much as 40 percent is the biggest economic challenge Argentina faces, presidential hopeful Sergio Massa said.

Massa, a former cabinet chief under President Cristina Fernandez de Kirchner who has since formed an opposition party, was the only one of three leading candidates to attend a rally today in Mendoza province with wine-grape producers who voiced disapproval over government policies that have kept price increases below inflation.

Agriculture Minister Carlos Casamiquela and Mendoza Governor Francisco Perez said they were working on measures to help grape producers during the harvest season.

“With 40 percent inflation nothing is sustainable,” Massa said in an interview. “I didn’t come here for a photo opportunity on a parade float. I came to speak with producers.”

Massa, who trailed Buenos Aires Mayor Mauricio Macri and Buenos Aires province Governor Daniel Scioli in recent polls, predicted the opposition candidate will be elected Mendoza governor in June, leading to changes nationwide during elections in October.

Hilda Wilhelm de Vairetti, head of the Viticulture Association of Argentina, said economic conditions have plunged the grape-producing industry into a crisis.

“Viticulture is going through a very grave time,” Vairetti said. “The main causes are without a doubt inflation and the value of the dollar which reduces exports.”

A man in the crowd at the Hyatt hotel in downtown Mendoza held a sign that said “bankrupt producer.”

‘Wake Up’

While consumer prices rose 24 percent in 2014, according to the government, private estimates place the figure at almost 40 percent. The official peso rate weakened 23 percent in 2014, mainly due to a 19 percent devaluation in January 2014. A black market for the currency trades at about 12.8 compared with the official rate of 8.76.

Casamiquela said a devaluation isn’t the answer. He called for more negotiations between the government and producers to ride out the difficult times, while saying demand for Argentine wine abroad has waned.

Massa said no government subsidies could keep provincial governments solvent.

“I listened to the minister and governor and my thoughts were ‘Wake up, it’s the inflation,’” Massa told reporters. “They don’t realize that provinces can’t stay afloat with inflation of 30 percent to 40 percent.”

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