Argentina's inflation rate slowed to 14-month low in August

Argentina's inflation rate slowed to 1.7 percent in August, its lowest monthly level in 14 months, the INDEC national statistics bureau reported on Thursday.

INDEC’s Consumer Price Index (CPI) now shows prices have risen 33.5 percent over the past 12 months and have increased 21.3 percent so far in 2026.

August’s figure was 0.4 points below the 2.1 percent recorded in July, returning inflation to the downward trajectory the government had hoped to see in the second half of the year.

Economy Minister Luis Caputo highlighted on the X social media platform that “August’s inflation was the lowest in 14 months,” as well as the lowest rate recorded for the month of August since 2017.

Core inflation rose 1.8 percent during August, slightly above the headline rate, pointing to continued underlying price pressures. The increase was linked primarily to higher housing rents and cultural services.

Regulated prices rose 2.2 percent, driven primarily by increases in electricity, gas, public transport and private healthcare costs. 

The decline in the monthly rate was helped by a 0.9 percent fall in seasonal prices, following a sharp increase in July linked to the winter holiday period. Lower prices for holiday packages and clothing offset increases in vegetables, tubers and pulses, and fruit.

Housing, water, electricity, gas and other fuels recorded the largest monthly increase, rising 2.8 percent, followed by education, which increased 2.5 percent.

Recreation and culture recorded no variation. Clothing and footwear was the only category to register a decline, falling 0.6 percent.

Food and non-alcoholic beverages had the greatest impact on the monthly inflation figure across Argentina's regions, driven by increases in vegetables, tubers and pulses, fruit, and bread and cereals.

President Javier Milei celebrated the result on social media, hailing his economy minister in the process.

Reducing inflation is one of the main priorities for his government, which took office in December 2023 amid triple-digit annual inflation.

Caputo noted that the three-month moving average for headline inflation had fallen to 1.9 percent, down 0.1 percentage points from July and a fifth consecutive decline.

Fresh air

President Javier Milei will hope the news delivers a breath of fresh air to his waning popularity after a challenging few weeks.

A positive omen had emerged Tuesday when the statistics institute of the Buenos Aires City government posted a monthly rate of 1.7 percent – a sharp slowdown from the 2.9 percent recorded in July.

Private consultancy firms and economists had generally forecast a rate for August of between 1.5 percent and 1.9 percent, with few predicting a rate of over two percent.

The Central Bank’s REM market expectations survey, in which nearly 40 analysts participate, produced an average read of 1.7 percent. 

President Milei previously promised that Argentina’s monthly inflation rate would start with “a zero” by August 2026. Even the most optimistic projections suggest such levels will not be reached until well into 2027, though price hikes are now slowing at a consistent level, if not rapidly.

Since taking office in December 2023, Milei has implemented fierce austerity measures that have eliminated the country’s chronic fiscal deficit and succeeded in bringing triple-digit inflation down to around 30 percent annually within two years.

The government has significantly cut public spending, closed tens of state agencies, enforced tens of thousands of redundancies and overseen a sharp decline in the purchasing power of wages and pensions.

Growth prospects have also weakened in recent weeks. The Central Bank’s REM survey, published early September, revised down Argentina’s forecasted growth rate for 2026 from 2.7 percent to 2.1 percent.

That estimate falls way short of the five percent growth Milei’s government forecast in its Budget bill.
 

Industry plummets

Additional INDEC data this week highlighted the challenges facing Argentina’s industrial sector, underlining the uneven nature of the country’s economic recovery.

Manufacturing output fell 4.9 percent year-on-year in July and was down five percent compared with June, according to the statistics bureau. The monthly decline was the sharpest recorded so far this year.

Industrial production was down 2.6 percent overall in the first seven months of 2026, with only March and June registering year-on-year growth.

The downturn was widespread, with 12 of the 16 manufacturing divisions tracked by INDEC posting declines. The steepest falls were recorded in other equipment, apparatus and instruments, down 31.4 percent year-on-year; machinery and equipment, which fell 26.7 percent; and clothing, leather and footwear, down 15.9 percent.

– TIMES/NA/PERFIL/AFP