
Monthly inflation inched slightly higher in June but remained low, a boost to President Javier Milei’s efforts to curb runaway prices.
Consumer prices rose 1.6 percent in June, only slightly up on the previous month and hinting at a potential stabilisation in the inflation rate.
June inflation came in at 1.6 percent, slightly up from May’s 1.5 percent, which had been the lowest rate in five years, the INDEC national statistics bureau said. That was below the expectations of both government and market analysts, which anticipated a figure close to two percent.
The annual rate came in at 39.4 percent -– down from 211 percent at the end of 2023 and 118 percent last year – but still one of the highest in the world.
President Javier Milei celebrated the figure immediately after its publication, hailing Economy Minister Luis Caputo’s stewardship and attacking his critics on social media.
“Vamos Toto,” Milei posted on social media, referring to Caputo’s nickname.
“Decent Argentines are celebrating while all of mandrilandia is crying,” wrote the President, who likes to refer to his critics as “mandrils.”
Since taking office in December 2023, Milei has slashed public spending in a bid to impose fiscal discipline, balance the books and cut inflation.
The President boasts that his “chainsaw” austerity has forced the closure of tens of government agencies, eliminated some 50,000 government jobs and almost completely stopped public works projects.
Last year, Argentina recorded its first budget surplus in a decade thanks to austerity cuts, but the collateral damage was a loss of purchasing power, jobs and consumer spending.
Inflation has come down dramatically. Consumer prices increased 15.1 percent in the first half of the year.
Education leads hikes
INDEC said June’s price hikes were fuelled by education costs, which climbed 3.7 percent), followed by housing, rent, water and electricity at 3.4 percent.
Alcoholic beverages and tobacco rose 2.8 percent in June, with recreation and culture up 2.5 percent.
At the other end of the scale, the lowest increases were recorded in food and non-alcoholic beverages at 0.6 percent and clothing and footwear, which rose 0.5 percent.
Among the different pricing categories, regulated prices rose 2.2 percent, followed by core inflation at 1.7 percent. Seasonal prices actually fell by 0.2 percent.
“The disinflation process that began in 2024 continues, with a six-month cumulative rise of 15.1 percent, compared to 79.8 percent during the same period last year,” Argentina’s Economy Ministry said in a statement.
Caputo highlighted a number of details on a thread on social media. “Core inflation was 1.7 percent, the lowest since May 2020. Excluding the exceptional months at the start of the pandemic, this is the lowest rate since January 2018,” he wrote.
“Goods prices rose just 0.8 percent month-on-month, the lowest increase since the current series began in January 2017,” said the minister.
“The year-on-year increase in the national CPI [consumer price index] was 39.4 percent, marking 14 consecutive months of slowdown compared to the same month of the previous year. This is the lowest annual figure since January 2021,” he wrote.
Expectations
National government officials and market analysts had anticipated a slight rise in inflation for the June data, forecasting a rate of between 1.8 percent and two percent.
Speaking to the press last week, Caputo had stated: “We don’t have a precise number for June, but we expect it to be below the 2.1 percent reported by the City of Buenos Aires. If we look at the weighting of goods and services, it’s services that rose the most. Logically, our index should come in below two percent.”
Local consultancy firms had highlighted increased school fees, food and beverages and core inflation in reports, with most erring on two percent or slightly above.
Improving inflation numbers have done little to quell the anger of Argentines over a loss in purchasing power, with wages having remained stagnant despite years of price rises.
According to INDEC data, a typical family of four needed 1.128 million pesos in June to avoid falling below the poverty line.
The bureau’s Total Basic Basket (CBT) index rose 1.6 percent in the month, in line with inflation, and has increased 29.2 percent year-on-year.
The Basic Food Basket (CBA), which measures the threshold for extreme poverty, rose 1.1 percent in June and 28.7 percent compared to June 2024.
According to INDEC, in June a three-person household required 898,336 pesos to cover the CBT, and 402,841 pesos to meet the CBA threshold.
In April, Argentina received US$12 billion as the first disbursement of an International Monetary Fund (IMF) loan worth US$20 billion, marking a strong vote of confidence in Milei’s economic programme.
When the loan deal was announced, the IMF said it was built on “the authorities’ impressive early progress in stabilising the economy, underpinned by a strong fiscal anchor, that is delivering rapid disinflation and a recovery in activity and social indicators.”
– TIMES/NA/PERFIL/AFP
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