Argentina inflation picked up slightly in February, in spite of President Javier Milei’s move to slow down the peso’s monthly depreciation.
Consumer prices rose 2.4 percent from January, more than the 2.3 percent median estimate of analysts surveyed by Bloomberg. The previous monthly inflation print came in at 2.2 percent. Annual inflation slowed down to 66.9 percent, according to government data published Friday.
On February 1, the Central Bank slowed down the currency’s monthly slide to one percent from two percent, a move meant to cool domestic prices that have been stuck between two percent and three percent per month since October. While it boosts Milei’s popularity at home, the slowdown also chips away at the currency’s competitiveness abroad and widens the country’s trade balance, which has in the past resulted in devaluations.
“It’s a slight acceleration with regards to January’s general print, but nothing we weren’t expecting,” said Pedro Siaba Serrate, head of research and strategy at Portfolio Personal Inversiones, a Buenos Aires broker. “We’ll have to wait to see how March goes, which our high frequency indicators show could put a ceiling on this rhythm.”
Economy Minister Luis Caputo had previously said in an interview he hoped the monthly inflation rate would dip below two percent after the modification. But economists were already expecting red meat, which weighs heavily on the inflation basket, to have a negative impact. Kids started going back to school in February, also putting pressure on prices. Price hikes were led by housing costs, followed by food, according to the government data.
“Unlike in previous months, food and beverages led increases, especially red meat, which increased more than seven percent and less so other areas like vegetable oil,” said Maria Castiglioni, director of consulting firm C&T Asesores in Buenos Aires. “Even so, year-on-year inflation fell dramatically compared with last February.”
The economy has been showing consistent signs of gaining momentum after a deep slump. Economic activity rose 0.5 percent in December, beating expectations for the third month in a row. Meanwhile, the government has sent clear signals that a fresh programme with the International Monetary Fund is closer than ever.
Economists surveyed by Argentina’s Central Bank expect year-on-year inflation to plunge to 23 percent this year, while the government predicted 18 percent in its 2025 budget.
by Manuela Tobias, Bloomberg
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