Utilities surge kept Argentina's inflation rate at monthly 2.9% in February

Inflation failed to slow last month, remaining consistent at 2.9 percent in February, the same rate recorded in January.

The lack of a slowdown will be of concern to the government of President Javier Milei, who made tackling price hikes the focus of his initial two years in government. He has regularly predicted that inflation will be below a monthly one percent by August.

According to official government data posted by the INDEC national statistics bureau, prices have risen 5.9 percent since the turn of the year and by 33.1 percent over the past 12 months. In the annual monthly comparison, inflation is now running 

Leading the increases in February were utilities, such as housing, water, electricity, gas and other fuels, which soared a worrying 6.8 percent due to the ongoing modification of the schemes for beneficiaries of subsidised and non-subsidised rates.

The second largest increase was in food and non-alcoholic beverages, which rose an above-average 3.3 percent and also recorded the widest spread when it comes to regional variations.

At the other end of the scale, the smallest increases in February were seen in alcoholic beverages and tobacco, up 0.6 percent, and clothing and footwear, which posted no variation.

At category level, regulated prices posted the largest increase of 4.3 percent, followed by core inflation at 3.1 percent. Seasonal prices rose less at 1.3 percent. 

A report by the Equilibra consultancy firm, released before INDEC’s data, foresaw that the largest increases in February were in housing, utilities and fuels, followed by food and non-alcoholic beverages, restaurants and hotels, and communications. 

Equilibra’s senior economist Gonzalo Carrera noted that while clothing and durable goods are becoming cheaper, “public service tariffs, meat, rent and restaurants are becoming more expensive and increasing their share of household spending”.

EcoGo Consultores, for its part, also highlighted food and beverage inflation, noting that “during February there was once again an acceleration in the price of meat, oils and vegetables.”

The national figure, which comes amid a surge in the price of oil due to the Iran war, was higher than the inflation data posted by the Buenos Aires City government. Earlier this week, City Hall’s statistics institute said prices increased 2.6 percent in February in the capital – down from the 3.1 percent posted in January.

INDEC became embroiled in controversy last month when the bureau’s chief, Marco Lavagna, resigned his post. Days earlier, the government U-turned on a decision to introduce a new methodology for measuring inflation, which had been in preparation since 2017.

The bureau’s new chief Pedro Lines, who worked under Lavagna, has begun to analyse different alternatives to update the indicator and move away from the current methodology, which is already 20 years out of date and is opposed by the International Monetary Fund.

While February’s national rate is far from good news for the government, private analysts had generally anticipated a figure of around three percent or just under, in line with January’s increase. 

Experts consulted by the Central Bank’s most recent market expectations survey (REM) had projected an increase of 2.7 percent.

Milei’s administration successfully slowed triple-digit inflation after taking office in December 2023, but since June last year, price hikes have been on an upward trend. Increases have intensified slightly since last September, when the monthly figure began surpassing two percent.

– TIMES/NA/PERFIL