Poverty in Argentina neared pandemic levels before Milei’s austerity

Poverty levels in Argentina rose slightly in the second half of 2023 as soaring inflation pummelled household spending power even before President Javier Milei’s shock therapy took hold.

About 41.7 percent of Argentines were living in poverty in the second half of the year, up from 40.1 percent previously, according to government data published Wednesday. It’s just below the peak of 42 percent seen during the pandemic and only expected to keep rising as Milei cuts government spending largely with brutal austerity measures.

Annual inflation surging past 276 percent drove the country’s poverty rate, which is calculated based on the cost of a basket of household goods and average wages. By December 2023, the cost of those basic goods had already surpassed incomes, according to Buenos Aires-based consultancy Empiria. Paycheques plunged 11 percent in real terms in December from November, the largest monthly income loss since the government began keeping track 29 years ago.

Since taking office December 10, Milei devalued the currency by 54 percent, cut interest rates and allowed public spending to be undercut by inflation. Chainsaw-style, he also halted virtually all public works, slashed funding to the provinces and is on track to eliminate 70,000 government jobs.

To be sure, Milei has prioritised trying to shield poor Argentines from some of the austerity pain: Days before the poverty data the government approved new spending increases for some of the most common welfare programmes.

Argentina’s economy shrank 1.9 percent in the fourth quarter of 2023, with economists forecasting an even sharper contraction of 3.5 percent in 2024.