Consumer prices rose 31.5 percent in Argentina last year, the lowest annual inflation rate since 2017, the INDEC national statistics bureau reported Tuesday.
Inflation last month was 2.8 percent, INDEC said, marking a slight acceleration from November and coming in above the expectations of private estimates.
In the Central Bank's latest Market Expectations Survey (REM), analyst and consultancy firms had forecast a December rate of 2.3 percent.
Following the year-low 1.5 percent rate recorded in May, monthly inflation fluctuated at low levels before rising again towards the end of the year. The worst month of the year for consumers was March, when prices soared by 3.7 percent.
The largest monthly increases in December were in transport (up four percent) and housing, fuel, and utilities (which jumped by 3.4 percent).
At the other end of the scale, education rose by 0.4 percent, while clothing and footwear were up 1.1 percent for the month.
Regulated prices rose by 3.3 percent, with core inflation at 3 percent. Seasonal prices were up 0.6 percent.
The news confirms the dramatic slowing of price hikes under President Javier Milei, who took office in December 2023 vowing to slow what was then triple-digit inflation. In the La Libertad Avanza leader’s first month in office, consumer prices increased by more than 25 percent alone.
In 2024, Argentina recorded its first budget surplus in a decade 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 upon taking office, driving annual inflation down from 211.4 percent in December 2023 to 117.8 percent in December 2024.
The 31.5 percent annual rate posted is the lowest since the 24.8 percent recorded in 2017 under ex-president Mauricio Macri.
According to the Central Bank survey, experts anticipate an annual inflation rate of 20.1 percent in 2026, with monthly increases expected to remain below 2 percent from February onwards.
However, analysts say the market's focus is no longer solely on the specific monthly figure, but rather on how this data will impact the new exchange rate system controlling the exchange rate, interest rates, and the Treasury's broader debt strategy in 2026.
Under new government rules, the peso’s exchange rate bands – within which the currency is allowed to trade against the dollar – adjust in line with inflation each month.
Economy Minister Luis Caputo welcomed the December inflation figure.
"An extraordinary achievement considering that it was obtained in a context of relative price readjustment, the implementation of a floating exchange rate and a sharp contraction in money demand,” he said, blaming the latter on a “fierce political attack.”
Caputo noted that running a fiscal surplus, “strict control" of money-printing, and the capitalisation of the Central Bank (BCRA) "will continue to be the pillars" for "continuing the process of disinflation.”
"It is increasingly clear that this is the only viable path to definitively eradicate inflation and make Argentina great again," the official concluded.
"Toto, the greatest," Milei wrote online, reposting his minister's comment and using Caputo's nickname.
However, economists warn that December's figures will set off alarm bells.
"December's inflation figures were bad," said Guido Zack, director of economics at the Fundar research centre, noting that this was the seventh consecutive month of price hikes.
The analyst added that "disinflation processes are not as rapid and linear as President Milei has suggested to the public," who has promised that inflation will soon be a "bad memory" for Argentines.
For Zack, the government prioritised the outcome of the October midterm legislative elections, in which Milei's party won more seats than expected, "and a low exchange rate to show a better macroeconomic situation."
Many economists warn that the exchange rate remains high, a factor that limits the Central Bank's accumulation of international reserves and poses a risk to the sustainability of the disinflation process.
Andrés Asiain, director of the Scalabrini Ortiz Centre for Economic and Social Studies, estimates that "Milei's stabilisation plan has found an inflation floor that it cannot break through."
On the street, the perception was similar. In downtown Buenos Aires, Cristina Gómez, a 60-year-old lawyer, said there was "nothing to celebrate."
For Florencia, a 40-year-old teacher who asked not to give her surname, "the only thing that is not increasing is the price of labour, of wages."
"So, of course, while there may not be a price increase as in other times, there is such a large wage stagnation that it feels like a lot," she explained.
– TIMES/NA/AFP
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