(Bloomberg) — Argentina’s spiraling inflation crisis has put the nation on a path to surpass Venezuela as the country with the fastest price increases in Latin America.

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As President Javier Milei braces Argentines for tough austerity measures seeking to correct years of unsustainable populist policies, prices are soaring after his government’s 54% peso devaluation. While estimates vary, almost all economists in Buenos Aires expect annual inflation to surge past 200% in December. Official figures are due Thursday afternoon.

Inflation in Venezuela, however, cooled last month to 193%, according to the Caracas-based Finance Observatory. Consulting firm Ecoanalitica sees price increases closer to 170%.

If Argentina didn’t surpass Venezuela in 2023, it’s definitely going to happen this year, according to Fausto Spotorno, director of economic research at Buenos Aires-based consulting firm Orlando J. Ferreres y Asociados. “We we expect a first half of the year with high inflation that could possibly reach 500% in annual terms.”

In his first month in office, Milei introduced a comprehensive package of economic reforms in congress. The measures would allow him to dramatically cut spending in Argentina and deregulate the economy by lifting subsidies on utilities and transport — implying further inflation shocks ahead. Although markets have welcomed the policies so far, Spotorno said Argentines will likely suffer triple-digit annual price increases for at least a year.

Venezuela, which broke one of the longest hyperinflation bouts in history in early 2022, had been struggling to contain prices as widespread corruption and tough US sanctions restrained oil exports, cutting supply of foreign currency. This encouraged Nicolás Maduro’s government to print more bolivars, fueling inflation.

But now the Biden administration has eased restrictions on the oil industry, improving Venezuela’s finances. And the central bank has managed to stabilize the currency by selling billions of dollars in the official exchange market, which reduced pressure on prices.

“US licenses have improved the balance of payments’ position and that has allowed to use the exchange rate as an anchor for inflation more effectively,” said Ángel Alvarado, senior fellow at the University of Pennsylvania and founder of the Finance Observatory. “This generates other problems but the strategy has shown, at least in the past two months, a more promising future.”

This year could bring back inflation problems as the Venezuelan government prepares for a crucial election. Further sanctions relief depends on Maduro’s commitment to ensure a more even electoral playing field.

“If oil prices don’t drop and there are no setbacks in sanctions relief, we see inflation decelerating” in 2024, said economist Tamara Herrera, director of Caracas-based financial analysis firm Síntesis Financiera. Herrera estimates prices to slow to 145% in 2024.

–With assistance from Ignacio Olivera Doll.

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