Inflation slowed to 2.2% in January – lowest rate in four-and-a-half years

Inflation in Argentina slowed to 2.2 percent in January, the lowest monthly rate in four-and-a-half years, according to official data.

Consumer prices have risen by 84.5 percent over the past year, the INDEC national statistics bureau reported Thursday – the first time that annual inflation has dropped to two digits since 2022.

The news is another boost for President Javier Milei’s budget-slashing government and is the lowest monthly rate of his administration to date.January was the fourth straight month in which prices rose by less than three percent.

Prices have not increased at such a low monthly rate since July 2020 and the Covid-19 pandemic, when strict price controls were in place.

INDEC said in its report that the monthly figure – the lowest since July 2020 – would have been even lower, were it not for a sharp 5.3-percent rise in prices for restaurants and hotels, mostly a result of the summer vacation season.

The second-highest monthly hikes were seen in housing and utilities, which rose four percent, mainly due to increases for rent and related expenses, electricity, gas and other fuels.

The closely watched categories of goods and services, food and non-alcoholic beverages and healthcare reported average hikes of 2.5 percent, 1.8 percent and 2.4 percent respectively.

The two divisions registered the smallest increases in January 2025 were education at 0.5 percent and clothing and footwear, which actually recorded a decrease of 0.7 percent.

At the category level, regulated prices (2.6 percent) led the way, followed by core inflation (2.4 percent) and seasonal prices (0.6 percent).

Prior to the release of the data, Economy Minister Luis Caputo had predicted “the lowest” rate of the Milei administration to date, forecasting 2.3 percent – in line with the market expectations outlined in the Central Bank’s regular REM survey.

“It is around what the market predicted, which based on expectations is in the order of 2.3 percent, and I think it should be around that, which means that it will be our lowest,” the official told Radio Rivadavia, describing it as “very positive news.”

“It means that the disinflation process is continuing and, obviously, it will continue because we are doing what we have to do to make it happen,” he said.

The most recent REM survey of market experts, economists and analysts forecast that inflation would be 23.2 percent in 2025. President Milei’s government, in its aborted 2025 Budget bill, predicted annual inflation of 18 percent.

Last week, consumer price data for Buenos Aires City showed that prices increased 3.1 percent in the capital in January, a slight drop of 0.2 points compared to the previous month.

Milei took office in December 2023 with monthly inflation running at 25.5 percent. Since then, consumer hikes have significantly slowed. By November 2024, it had fallen to its lowest level in over four years on the back of an austerity programme that has entailed laying off over 33,000 public sector workers, halving the number of government ministries and vetoing inflation-aligned pension increases.

The President’s measures, which plunged Argentina into recession, are blamed for tipping millions more people into poverty in the first half of 2024 and brought tens of thousands of people into the streets in protest.