Monthly inflation in Argentina slows to lowest level since November 2021

Inflation in Argentina slowed to 3.5 percent in September – the lowest monthly rate since November 2021.

The news is a boost for President Javier Milei’s government, which has put slowing consumer price hikes and achieving fiscal balance at the heart of its programme. 

The La Libertad Avanza leader took office last December with inflation running at a monthly 25.5 percent and has slowly managed to tame runaway price hikes. 

According to data from the INDEC national statistics bureau, consumer prices have accelerated by 209 percent over the last 12 months and by 101.6 percent since the turn of the year.

In August, inflation reached 4.2 percent – 0.7 points higher than last month.

Prior to the release of the data, private consultancy firms and Milei’s economic team had anticipated a rate of below four percent.

In the most recent Central Bank survey of market expectations (REM), experts had forecast 3.5 percent, with a rate of 3.4 percent to follow in October.

Some consultancy firms, such as the Fundación Libertad & Progreso, had even put the figure as low as 3.2 percent.

“The slowdown in general and core inflation reflects how the markets have reacted positively to the decisions taken, especially with the lowering of the PAIS tax,” said Libertad & Progreso economist Clara Alesina.

"Favourable fiscal results, together with a reasonably constant monetary base, provide incentives to assume that the decelerations will continue, which will eventually lead us to converge towards an inflation rate of two-percent per month,” she added.

Economy Minister Luis Caputo highlighted last weekend that inflation “reached single digits in April; in August wholesale inflation was 2.1 percent; and the dollar is lower than when we arrived.”

“The important thing is that the inflationary trend is clearly downwards, and it is natural that it should be so,” said the official.

Utilities lead way

September’s inflation rate was propelled by hikes in rent, water electricity, gas and other utilities, which overall rose 7.3 percent for the month.

This was followed by clothing and footwear, up six percent, mostly due to seasonal changes.

The two divisions with the smallest changes were alcoholic beverages and tobacco at 2.2 percent, and recreation and culture, up 2.1 percent.

September’s 3.5 percent rate is the lowest of the calendar year to date and the fifth consecutive month of inflation under five percent.

However, critics say that tampering runaway price hikes has come at the cost of falling consumption and soaring poverty.

Data published by INDEC last month showed that poverty affected 52.9 percent in the first half of 2024.
 

946,000 FOR FAMILY OF FOUR

According to INDEC, the price of the Total Basic Food Basket (CBT) increased by 2.6 percent during September. This means  that a family group made up of a couple with two children needed 964,619 pesos to buy essential food, clothing and transport and not fall into poverty.

The agency also reported that the cost of the Basic Food Basket (CBA), which defines extreme poverty, increased 1.7 percent last month. The same family therefore needed 428,719 pesos.