Argentina inflation slows to lowest under Milei

Argentina’s monthly inflation reached the lowest level since late 2021, scoring a significant win for President Javier Milei as he makes lowering price spirals the centrepiece of his administration.

Consumer prices rose 3.5 percent in September from August, below the 3.6 percent median forecast of economists surveyed by Bloomberg. Annual inflation slowed to 209 percent, according to government data published Thursday. Inflation had hovered around four percent since May.

Housing and utilities led monthly price hikes, followed by clothing and education.

“Inflation was pretty level across the country and core inflation went down, which is a positive data point that obviously breaks the four-percent barrier,” said Maria Castiglioni, director of consulting firm C&T Asesores in Buenos Aires.

In September, Milei slashed the country’s main import tax from 17.5 percent to 7.5 percent, while the gap between the official exchange rate and the parallel rate, which also affects prices, narrowed. 

Milei has said he would get rid of the import tax altogether by the end of the year. He insisted this week that capital controls, and the peso’s two-percent monthly depreciation rate, will remain in place, which also help keep a lid on inflation.

Meanwhile, Milei marched on with subsidy cuts. Train fares jumped nearly 40 percent percent last month, with the minimum ticket rising from 200 to 280 pesos. Water, gas and electricity prices all picked up by around four percent as the president also reined in long-existing government aid, with gas prices seeing marginal increases, too.

Milei’s victory lap is expected to continue, with economists forecasting that annual inflation will drop sharply to 40.9 percent in the next 12 months, according to a monthly survey conducted by the nation’s Central Bank. 

The Central Bank’s survey posted October 4 shows economists expect annual inflation to fall to 123.6 percent by the end of 2024.