Paraguay reports 0% inflation in February, but at what cost?

Paraguay reports 0% inflation in February, but at what cost?

Paraguay’s Central Bank (BCP) announced this week that inflation in February amounted to 0% from January’s values despite increases in education and food, particularly eggs, it was reported in Asunción. In the same month last year, the Consumer Price Index (CPI) had gone up 0.5%. However, these achievements have a price tag.

With this week’s results, inflation for the first two months of the year amounted to 0.9%, below the 1.7% recorded in the same period of 2023. In the 12-month yoy comparison, inflation stood at 2.9% while by January it was 3.4%. It was also an improvement from the 6.9% from the same period of the previous year.

The behavior of consumer prices last month was characterized, on the one hand, by increases in services related to education (which is usual at this time of the year) and others, together with some foodstuffs, the BCP explained. But price decreases in other food goods and fuels yielded a 0% result.

Increases were recorded mainly in dairy products, cereals and byproducts, baked goods, rice, and non-alcoholic beverages, among other items, particularly eggs (13.4%). Medical insurance and urban transport also went up. The BCP also reported drops in some beef cuts due to a greater domestic supply after an increase in slaughter in January.

Argentine Congressman and former Vice-Presidential candidate Miguel Ángel Pichetto said that Paraguayan “macro is spectacular but they have 5% of rich people, the rest of the population is very poor,” which leads to emigration. Pichetto thus targeted Argentina’s open border policies and urged his government to stop “being stupid” and “bet on a model of defensive nationalism.”

“I know that it is not a politically correct idea and that I am going to have a row, but I can handle it,” he added. In Paraguay, “they have no inflation, the Central Bank works like clockwork” but “5% of the population concentrates the wealth, the rest is massively poor.”

Earlier this year, the leader of the Hacemos Coalición Federal bloc criticized the Autonomous City of Buenos Aires for providing medical care to foreign travelers. “Argentina is still a generous country,” Pichetto lamented as poverty nationwide is on a rampant surge. “Our generosity has no limits,” Pichetto insisted.

In his recent trip to Spain, Paraguayan President Santiago Peña said that Argentina under Javier Milei was trying to replicate the Paraguayan model “which is to have an economy with low inflation, low public debt, and high investment.” Milei “wants to do what we have done,” Peña argued while insisting that Paraguay today has the strongest macroeconomic scenario in Latin America with a 5% growth in 2023 as interest rates keep going down.