Boost for Milei as monthly inflation read dips below 2% threshold

Argentina's monthly inflation rate fell below the two-percent mark in June for the first time since August 2025, furnishing President Javier Milei's government with some timely good news.

With his government on the back foot following a scandal-driven Cabinet reshuffle, Milei and his officials were able to cheer figures published by the INDEC national statistics bureau on Tuesday that showed prices rose 1.9 percent in June.

The bureau's report extends the slowdown that began in April. Inflation has slowed since March’s peak of 3.4 percent and has now slipped below the desired two-percent mark.

Argentina’s inflation woes, however, are far from over. Prices have risen 16.8 percent so far this year, according to INDEC. Annual inflation remains stubbornly high at 33.5 percent.

Market analysts had forecast inflation of between 1.5 percent and 2 percent, based largely on recent data from Buenos Aires City.

June’s figure was driven by rises in housing, utilities and fuel prices, which increased 3.5 percent. Recreation and culture posted the sharpest monthly increase of 4.2 percent, while communications (0.9 percent) and clothing and footwear (0.4 percent) rose more modestly.

Core inflation – which excludes seasonal factors and regulated prices – was 1.6 percent, the lowest value since July 2025. Seasonal prices produced the largest monthly spike at 3.4 percent.

"The three-month rolling [inflation] average fell by 0.5 percentage points (p.p.) compared with May, reaching its lowest level since October last year and reflecting the strength of the disinflationary process," said the Economy Ministry in a post on social media.

The data was welcomed by Milei and his top officials. The President reposted several messages on X celebrating the lowest inflation reading since last October.

Newly appointed presidential spokesperson Adrián Ravier struck a similarly upbeat tone, projecting confidence that inflation is no longer a cause for concern.

Economy Minister Luis ‘Toto’ Caputo posted on X that June's data reflected "the strength of the disinflation process" under President Milei, noting that the headline rate was the lowest monthly figure since August 2025.

Caputo also highlighted that food and non-alcoholic beverages rose 1.3 percent last month, while clothing and footwear increased just 0.4 percent.

Cost-of-living indicators also climbed, the minister confirmed. The Basic Food Basket (CBA) rose 1.3 percent, while the Total Basic Basket (CBT) – used to calculate the poverty line – increased 2.2 percent.

Santiago Casas, chief economist at the EcoAnalytics consultancy firm, said that “the breakdown of the data points to a very positive outlook.”

“Goods rose by just 1.4 percent month-on-month and, within this category, food and non-alcoholic beverages recorded an increase of only 1.3 percent, confirming that disinflation is spreading to mass-market consumer goods,” he noted.

But not everyone was ready to declare a turning point.

"Beyond June's specific figure, what matters will be watching the inflation trend in the coming months. What will really matter is whether inflation can sustain that level [below two percent] over time," said Javier Bongiovanni, an economist at the Fundación Libertad think tank.

Since taking office in December 2023, Milei has implemented a strict austerity programme that eliminated Argentina's chronic fiscal deficit and brought inflation down from triple digits to the current annual rate of 33.5 percent – all within two years.

But the adjustment has come at a cost: deep cuts to public spending, the closure of state agencies, tens of thousands of layoffs and a sharp erosion of wages and pensions.

Argentina's economy grew 0.7 percent in the first quarter, buoyed by primary exports and financial intermediation. But the recovery remains uneven, with those sectors driving growth while industry and commerce continue to contract.

– TIMES/AFP/NA/PERFIL

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