Inflation slows to lowest level since 2022 under Milei

Argentina’s monthly inflation reached the lowest level since early 2022 after President Javier Milei briefly tapped the brakes on his economic shock therapy by postponing utility hikes.

Consumer prices rose four percent in July from a month earlier, in line with the four-percent median forecast of economists surveyed by Bloomberg. Annual inflation slowed to 263.4 percent, according to government data published Wednesday.

Argentina’s government last month postponed increases to fuel taxes and utility prices that JPMorgan Chase & Co predicted could have added 1.2 percentage points to monthly inflation. The administration also left bus and train fares untouched, though it will restart transport and utility hikes in August.

“Energy tariffs are a fine harmony between reducing subsidies and inflation,” Economy Minister Luis Caputo said in a radio interview last month. “The priority is to lower inflation.”

The government has also consistently rejected calls to speed up its two-percent crawling peg, a monthly depreciation of the official peso rate, despite mounting evidence the currency has become overvalued. The slow crawl is instrumental to keeping inflation in check, alongside the government’s consistent budget surpluses.

The lower inflation number spells yet another victory for Milei amid wall-to-wall coverage of a domestic abuse scandal shrouding the opposition Peronist party. 

Fabiola Yáñez, the former first lady, filed a legal complaint last week against ex-president Alberto Fernández, alleging gender violence.

Fernández, who made feminism one of his administration’s flagship causes, has denied the claims. Analysts say the news only stands to boost Milei’s popularity.