Tea price spike brews Argentina inflation fears

Thu Apr 26, 2012 11:41am EDT
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By Guido Nejamkis

BUENOS AIRES (Reuters) - Yerba mate tea sipped through a metal straw is as Argentine as steak or tango, so a surge in prices for the nation's favorite hot drink is proving worrisome for President Cristina Fernandez.

Inflation in Latin America's No. 3 economy is already running at up to 25 percent per year, according to independent economists, one of the highest rates in the world.

Prices for the emblematic beverage, which is served in a small-gourd-like cup, have skyrocketed in the last few weeks - partly due to a severe drought that hit crops in the main northern growing areas.

"What's happening with yerba prices is a disgrace, it's simply criminal and we're going to shut down as many businesses as we have to," Agriculture Minister Norberto Yauhar said this week, lambasting speculation by retailers and middle-men.

Fernandez has shunned mainstream monetary and fiscal recipes to tame years of high inflation, opting instead for cost-cutting deals thrashed out by controversial price watchdog Guillermo Moreno and export curbs on sensitive goods such as beef and wheat.

Moreno's Domestic Commerce Secretariat has urged consumers and retailers to call a hotline to report excessive prices, and the president - currently on a protectionist mission to limit imports - has warned local suppliers she will not shy away from buying the tea abroad if necessary.

"I will not tolerate these ridiculous yerba prices," Fernandez said last week as she unveiled plans to renationalize the country's biggest energy company YPF. "Not only do I have to sort out oil, I have to sort out yerba too.

Yerba mate prices have jumped to almost 40 pesos ($9) per kilo (2.2 pounds) in some supermarkets, despite government regulations that say leading brands should sell for between 9 pesos and 16 pesos per kilo.   Continued...

A woman sips mate (a type of herbal tea) at the Museo de la Ciudad in Buenos Aires July 20, 2010. REUTERS/Enrique Marcarian