Key Economic Indicator Shows Slow Recovery Despite Deflation
Understanding the Current Economic Landscape in Argentina
In late 2025, Argentine household consumption has once again become a central topic in economic discussions. The country is experiencing a process of disinflation, stabilizing around 2% monthly growth, while economic activity displays mixed signals. The demand indicators suggest a tension in the official narrative, which focuses on price reductions as the primary means of improving living standards. However, recent data indicates that this relationship may not translate into a sustained consumption recovery in the short term.
Recent Consumption Data and Its Implications
According to the latest report by the Argentine Chamber of Commerce and Services (CAC), the Consumer Index (IC) recorded a 2.8% interannual decline in November 2025, with a 1.3% monthly drop compared to October. This result interrupts a mostly positive sequence throughout the year and re-emphasizes the vulnerability of household consumption.
The report states that average nominal income per household was $2,582,000 in November, though it experienced a slight real decline compared to October after accounting for inflation. Simultaneously, the Consumer Price Index increased by 2.5% in November, marking the third consecutive month above 2%, following several months of relative stability within that range. Annually, inflation reached 31.4%, with a cumulative 27.9% in 2025.
Linking Consumption with Economic Activity
The CAC emphasizes that consumption should be analyzed alongside economic activity behavior. In this context, the report notes that both the Consumer Index and the Monthly Estimator of Economic Activity (EMAE) shared a similar general direction in 2024 and parts of 2025, albeit at different speeds. For October (the latest available data), the EMAE grew 3.2% interannually, while the IC still showed a positive variation. However, in deseasonalized terms, consumption fell 0.5%, ending a streak of three consecutive monthly increases.
Historical Volatility of Consumption
Examining the longer-term perspective highlights the volatility of consumption in recent years. The historical series of the Consumer Index, based on 2017=100, displays a clearly irregular path with marked oscillations and a “serrated” behavior reflecting macroeconomic instability during the period. Within this trajectory, two sharp drops in 2020 are notable, linked to the pandemic’s impact and leaving a persistent mark on consumption levels.
Since Javier Milei’s assumption on December 10, 2023, the series has shown a recomposition phase following a contractive 2024, though without establishing a linear trajectory. In 2025, the indicator regained ground in interannual comparisons, partly explained by a low base of comparison. However, monthly measurements alternated between advances and retreats, suggesting that despite some macro stability, consumption remains sensitive to income, price changes, and expectations.
Income and Consumption Relationship
The CAC report also includes an analysis of the link between consumption and available household income. Comparing the Consumer Index with income evolution reveals that both variables haven’t always moved in sync. In some periods, consumption followed real income improvements, while in others, it diverged, indicating that the recovery of purchasing power did not automatically translate into increased spending. This divergence offers insight into why a decrease in inflation alone does not guarantee a sustained consumption reactivation.
Sector-wise Consumption Analysis
Upon examining the indicator’s composition, heterogeneous behaviors by sector were observed. In November, clothing and footwear grew 16.8% interannually, contributing a positive percentage point to the overall index amid low base comparison. Recreation and culture advanced 5.2%, while transportation and vehicles fell 2.0% and housing, rentals, and public services retreated 0.6%. The remaining sectors recorded a 5.7% interannual decline, with a significant negative impact on the final outcome.
Conclusion
In summary, the CAC concludes that consumption is closing 2025 with signs of greater stability but without a firm recovery. The deflationary slowdown, which stabilized at low levels and showed a slight acceleration in recent months, has yet to translate into sustained household expenditure improvement. In this regard, consumption remains a key indicator challenging the official narrative and crucial for assessing the economic pulse at the start of 2026.
Key Questions and Answers
- What is the recent trend in Argentine household consumption? Household consumption has experienced a 2.8% interannual decline in November, interrupting a mostly positive sequence throughout the year.
- How does Argentina’s disinflation impact consumption? Despite stabilizing around 2% monthly growth, the deflationary trend has not yet resulted in a sustained consumption recovery.
- What is the relationship between economic activity and household consumption? Both the Consumer Index and the Monthly Estimator of Economic Activity (EMAE) have shared a similar direction, though at different speeds, indicating that consumption remains sensitive to income, price changes, and expectations.
- How has historical consumption volatility affected Argentina’s economy? The Consumer Index series shows marked oscillations and a “serrated” behavior, reflecting macroeconomic instability. Notable drops in 2020, linked to the pandemic’s impact, have left a persistent mark on consumption levels.
- What does the income-consumption relationship reveal about Argentina’s economy? Both variables haven’t always moved in sync, with consumption following real income improvements in some periods and diverging in others. This suggests that inflation reduction alone does not guarantee a sustained consumption reactivation.
