(Reuters) - Inflation in July could be so high that it will "shock" Argentina's government, an economy ministry source told Reuters on Thursday, expecting high inflation in August as well.
Former Congressman Sergio Massa took office Wednesday as economy minister in the midst of an economic crisis, announcing measures intended to ensure fiscal austerity and to shore up dwindling foreign currency reserves.
The source added that with cuts to subsidies on gas, electricity and water, the government would save 500 billion pesos ($3.8 billion) a year, although the full impact would not be felt until the 2023 accounts.
The government of President Alberto Fernandez also expected a sharp reduction in spending on energy imports in the second half of the year, the source said, adding that the government hoped workers' salaries would at least "match" high inflation in 2022, which analysts estimate will exceed 70%.
In regards to the country's renegotiation of $2 billion in debt with Club of Paris creditor countries, the source said the government would try to reach a debt agreement "as quickly as possible."