Background on Argentina’s Economic Situation
Argentina has been experiencing a mixed economic scenario, with the government celebrating the deceleration of inflation and other favorable macroeconomic indicators. However, private consumption continues to show an uneven performance.
Key Indicators and Their Implications
In May, the Consumer Index (IC) prepared by the Argentine Chamber of Commerce and Services (CAC) reported a 1.5% year-on-year increase, marking the weakest growth since the beginning of the year. Compared to April, there was a 0.4% monthly decline.
This data reflects the incipient recovery of consumption, which is one of the main demands from the opposition. Other indicators, like retail sales surveyed by CAME, also signal weak internal demand.
Real Income and Its Limited Impact
Despite the improvement in average real household income, estimated at $1,912,000 for May with a real increase of 0.4% compared to the previous month by CAC, the recovery signals have not been generalized.
Consumer Index Breakdown
The CAC’s Consumer Index, which measures the evolution of final goods and services consumption in Argentine households, showed interannual improvement but a monthly decline. In the first five months of 2025, all interannual records were positive; however, May exhibited the lowest variation.
- The increase was supported by some sectors with strong annual increases, but a decline was also observed in key areas like public services and housing.
- The general index remains below pre-pandemic levels in several segments.
Historical Volatility in Consumer Spending
Analyzing the historical series of consumption in May reveals significant volatility across all sectors, with years of substantial declines followed by rebounds.
- For instance, clothing and footwear showed its worst performance in May 2020 during the pandemic, with a 75.5% contraction, followed by a rebound of 79.6% the next year.
In contrast, essential consumption-related sectors had a more stable but less expansive evolution.
- Housing, rentals, and public services alternated small increases and decreases since 2018. In May 2025, housing showed another decline (5.9%), the most pronounced since 2021.
May 2025 was marked by weak increases, amidst a slowing recovery and an incomplete recomposition in the most sensitive sectors.
Expert Opinions and Future Outlook
Analysts warn that sustained improvement in purchasing power and greater stability are still needed to solidify the upswing.
The positive evolution of credit, along with a slight real increase in average incomes, could support the upward trend in the short term.
