Menem Assails ‘Savage’ Argentine Price Boosts

The new Argentine government warned Wednesday that constant price increases, in defiance of government orders, threaten to incite a fresh wave of violence and frustrate attempts to rein in hyper-inflation.

President Carlos Saul Menem, who was sworn in Saturday and imposed a fierce austerity program the following day, complained publicly in four addresses that businessmen are continuing “savage” price increases.

“I don’t want to describe them as immoral,” Menem said in one jawboning speech, but “it seems that there are Argentines who do not understand the magnitude of the crisis and who worry more about their own interests than those of the whole society.”

Interior Minister Eduardo Bauza, who is in charge of security, said there is a “latent danger” of new disturbances because of the hunger and impoverishment caused by the hyper-inflation of recent months.

On Tuesday, a 19-year-old man was shot to death by a store owner during the looting of a market in Tucuman in northwestern Argentina. Isolated cases of looting were reported in three cities, although nothing like the outbreak of violence over several days in late May in which hundreds of shops were looted, 15 people were killed and 2,000 arrested.

That unrest helped persuade lame-duck President Raul Alfonsin to step down, letting Menem take office five months early to launch his program based on cooperation among business, labor and government to cure the diseased economy.

Union leaders, meanwhile, complained that company owners were using the economic crisis as a pretext to lay off thousands of workers and many union activists, the majority of them from Menem’s Justicialist, or Peronist, party.

Ordered to Roll Back Prices

Although the government told businesses Sunday to roll back prices to July 3 levels, many apparently ignored the order pending a formal agreement between the government and chambers of commerce and industry. Those talks have continued without an accord, and some firms have pushed up prices to give themselves a cushion in anticipation of an agreement.

Civilian Argentine governments historically have been unable to enforce price controls without the backing of leading industries. Workers’ buying power, meanwhile, has been crippled by inflation that hit 114% for June alone.

Bauza said that “the root of the problem is that Argentina is without work, the factories are closed and we have been in government for just three days.”

He said the government is attempting to balance its austerity measures with a socioeconomic program that would alleviate the impact on the most needy and that those with means would have to bear a greater burden.

Menem appealed to business leaders to “limit their appetites” and said that the price boosts “cause me profound sadness.” Such increases, he said, “do not fit with the reality, nor with moral and good customs, nor with the 9 million Argentines who live on the edge of survival.”

Food Prices Shot Up

Fruits and vegetables, which had resisted price increases in recent weeks, shot up by 50% on Tuesday, while fish and some toiletries and cleaning products rose by 75%. One kilogram (2.2 pounds) of steak, once taken for granted as a staple in beef-rich Argentina, sold for the equivalent of $2. In comparison, the minimum wage is now worth about $43 a month.

Taxi fares were raised 245%, pushing the flag drop from 44 to 152 australs. After the 53% devaluation of the currency, the austral is now worth just 23 cents.

But the slicing of the austral against the dollar encouraged exporters to cash in millions of dollars for australs, boosting the Central Bank’s scant reserves. Interest rates also plummeted from more than 100% a month to less than 10% Wednesday, considered a key step in reducing inflation.

The sevenfold increase in gasoline prices Monday led commuters to switch to trains and buses, and the normally horrific traffic thinned to Sunday-style serenity.

Menem, an amateur race car driver, said he will use his own car rather than an official car to save the government money and will pay for his own gasoline, as a gesture of austerity.