Inflation slowed to monthly 2.1% in May, reports INDEC

Inflation slowed in May to 2.1 percent, according to the INDEC national statistics bureau, decelerating for a second consecutive month.

It is the lowest monthly figure for Argentina since last September and confirms an inflationary slowdown after consumer prices soared 3.4 percent in March. 

The news is a boost for President Javier Milei, which made tackling consumer price hikes one of the centrepieces of his administration. Overall, inflation fell by half a point from the preceding month.

According to INDEC, consumer prices have increased by 14.7 percent in the first five months of the year and have risen 33.2 percent over the past 12 months.

Leading the hikes was communications, which rose an average 3.4 percent, mainly due to a surge in telephone costs. Education was the second-highest category with 2.9 percent.

Healthcare (up 2.6 percent), housing and utilities (2.6 percent), food and non-alcoholic beverages (2.5 percent) and goods and services (2.4 percent) all recorded above-average increases.

The categories recording the lowest increases were alcoholic beverages and tobacco (up 0.8 percent) and clothing and footwear (0.3 percent).

According to INDEC, seasonal prices soared 3.5 percent, with a notable rise for vegetables, with regulated prices rising 2.4 percent and core inflation of 1.9 percent. 

Most market analysts had anticipated a monthly reading of around 2.3 percent for May. Consultancy firms generally opted for a figure of between 2.1 and 2.4 percent. 

Battle against inflation

Curbing inflation is a key objective of Milei, who took office in December 2023 with promises to revive the economy by slashing public spending.

The President cheered the latest INDEC measurement, praising the work of Economy Minister Luis Caputo in a post on social media. He noted that core inflation had dropped below the two-percent threshold.

Argentina recorded its first budget surplus in a decade in 2024 thanks to austerity cuts, but the collateral damage was a loss of purchasing power, jobs and consumer spending.

Milei devalued the peso by more than 50 percent, cut spending and froze budgets, driving annual inflation down from 211.4 percent in December 2023 to 117.8 percent in December 2024.

Argentina’s economy expanded last year after two years of contraction. 

However, the growth was uneven, with some sectors – such as financial services, agriculture and mining – expanding, while others – like manufacturing and retail trade – slowing.

Unemployment remains concerning, increasing by 1.1 percentage points to 7.5 percent over the past year, not including the large number of people informally employed across the country.

Purchasing power

For many Argentines, the difference between INDEC’s reading and everyday prices remains substantial.

A report published in May by the University of Buenos Aires (UBA) notes that between November 2023 and April 2026, those living on the minimum wage lost 39.3 percent of its purchasing power.

“There are certain kinds of purchases that give you a moment of optimism – something you haven’t bought for a while and hoped would have gone up in price but hasn’t, or a service that’s stayed the same for months,” says Horacio Barros, a 41-year-old music producer, on the streets of Buenos Aires.

“When you try to give in to that optimism, you realise you’ve run out of money sooner than you did last month,” he added.

INDEC’s analysts said Thursday that a family of four needed 1,498,741 pesos in May to be classified as above the poverty line, a two-percent increase on the previous month.

The monthly change in the basic food basket (CBA) in May was 2.4 percent. The total basic basket (CBT) rose by two percent. 

– TIMES/AFP/NA