Argentina inflation slowed in April amid currency policy change

Argentina’s inflation slowed down more than expected in April despite a change in the currency policy traders were betting would fan volatility.

Consumer prices rose 2.8 percent from March, less than the 3.2 percent median estimate of analysts surveyed by Bloomberg. That’s down from March’s 3.7 percent reading. Annual inflation slowed for a 12th month to 47.3 percent, according to government data published Wednesday. Price increases were led by food and non-alcoholic beverages.

The peso now floats freely between bands, a major policy change unveiled April 11 as part of Argentina’s new US$20-billion programme with the International Monetary Fund. In March, speculation of a roughly 10 percent devaluation stoked prices. But the devaluation never took place and instead, as the government insisted, the peso has strengthened within the bands.

“We barely saw any pass-through to prices after lifting capital controls because that price adjustment had already been made amid March’s uncertainty,” said Dante Ruggieri, partner at AT Inversiones, a Buenos Aires consultancy firm. “This had more to do with seasonal issues than the currency.”

Just five months ahead of crucial midterms, the peso has become a cornerstone of President Javier Milei’s electoral strategy. A stronger peso is sure to fuel optimism among Argentines about the economic outlook. On the flip side, it could also hurt exporters’ margins and competitiveness. Ruggieri expects monthly inflation could fall below 1.5 percent ahead of the October vote. 

Economists surveyed by Argentina’s Central Bank expect annual inflation to slow to 31.8 percent in 2025, accompanied by 5.1 percent growth.