December 1, 2017 / 3:28 PM / a year ago

Argentina hikes gas, electricity rates as government cuts subsidies

BUENOS AIRES, Dec 1 (Reuters) - Argentina has again raised the price consumers pay for electricity and natural gas, the government said in its official gazette on Friday.

The Energy Ministry’s decision comes as President Mauricio Macri’s market-friendly government seeks to reduce subsidies for energy consumption as part of efforts to shrink the fiscal deficit.

The subsidy cuts over the past two years have contributed to high inflation in the South American country. Economists expect consumer prices to rise 23 percent this year, above the central bank’s target range of 12-17 percent.

The average Argentine family will now pay around 1,500 pesos ($86.97) per month in total for gas and electricity, Energy Minister Juan Jose Aranguren said at a press conference. The last price hike for power was in March. Lower-income Argentines will retain access to subsidized rates.

Local media said the new rates represented increases of about 45 percent.

Aranguren said the higher prices would encourage domestic energy production and reduce Argentina’s dependence on imports. Argentina currently imports around one quarter of the natural gas it uses.

“That, for a country abundant in hydrocarbon resources, is almost sacrilege,” Aranguren said. “We need to create the conditions to have a system that allows us to recover investment.”

$1 = 17.2475 Argentine pesos Reporting by Hernan Nessi; Writing by Luc Cohen; Editing by Bernadette Baum

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