During Argentina’s hyperinflationary phase in 1991, the annual inflation rate exceeded 100% in February, reaching a 30-year high.
Despite experiencing a 34% decline versus US dollars during the same time period, Bitcoin has increased 20% in value against the Argentine Peso.
Consumer Price Index (CPI) figures revealed by the government on Tuesday indicated a rise of 6.6% for the entire month and 13.1% for the entire year.
Highest inflation rates
According to government data released on Tuesday, the Consumer Price Index (CPI) rose by a higher-than-anticipated 6.6% over the month, resulting in a year-to-date increase of 13.1%, and inflation exceeding 102.5% over a 12-month period as of the second month of the year.
Citizens of the country may immediately feel the currency’s quick depreciation. Citizens are unable to buy anything as they face soaring expenditures that climb monthly. As one of the world’s highest inflation rates continues to strain people’s finances, the impact of soaring prices is being acutely felt in Argentina’s markets, shops, and households.
Argentina, where the rate was 55.1% in March of last year, has one of the top 10 highest inflation rates in the world in 2022.
Despite the country’s central bank cracking down on crypto-related businesses, the area has a reasonably high acceptance rate for cryptocurrencies, coming in at number 13 on Chainalysis’ 2022 crypto adoption index.
Persistent economic crisis
The South American country’s persistent economic crisis has been exacerbated by a surging inflation rate, attributed to several factors such as a significant influx of money into circulation by the central bank and the devastating impact of a prolonged heatwave and subsequent drought, which destroyed crops and affected agricultural exports.
Nigeria and Turkey, two nations with severe inflation that only helps to increase cryptocurrency use, lead Argentina in that same ranking. Bulls in Bitcoin frequently view the asset as a long-term inflation hedge due to its fixed supply.
On the other hand, because of its relative volatility, central banks in charge of relatively stable currencies, like the Bank of Canada, contend that Bitcoin is not a hedge against inflation.
Despite attempts by the government to curb rising prices, which erode people’s earning power, savings, and the country’s economic growth, as well as hinder the ruling party’s prospects in crucial elections later this year, their efforts have been unsuccessful.
Inflation dominates conversations on the streets, causing frustration and anger as salaries struggle to keep up with the cost of goods, despite government initiatives aimed at capping prices and restricting grain exports to increase domestic supply.