Overview of Inflation Trends in Argentina
Argentina’s inflation rate remained relatively stable in June, with a 1.6% increase compared to May’s 1.5%, according to the National Institute of Statistics (Indec).
The Consumer Price Index (CPI) accumulated a 15.1% rise in the first half of 2023, contrasting with a 79.8% increase during the same period in 2024, as reported by Indec.
The annual price increase was 39.4%, while in 2024, the inflation rate stood at 118% annually.
President Javier Milei’s Reaction and Criticism
President Javier Milei celebrated the stable inflation on his X account, using the term “mandriles” to refer to his critics. The term is derived from “mandril,” which means monkey in Spanish, reflecting his dismissive attitude towards opponents.
Several economists and opposition lawmakers have questioned the Indec’s measurements, arguing that the consumer basket used does not accurately represent the cost of living since it was last updated in 2004, when internet, cable, and mobile telephony were not widely available in Argentina.
June’s Price Increases and Sectoral Performance
In June, the sectors with the highest increases were education (3.7%) and services such as gas, water, and electricity (3.4%). Meanwhile, food and non-alcoholic beverages (0.6%) and clothing (0.5%) experienced the smallest growth, according to Indec.
President Milei has managed to decrease inflation from 211% in 2023 to 118% in 2024, contributing to a reduction in poverty rates from 52.9% in the first half of his previous term to 38% in 2023.
Austerity Measures and Their Impact
Milei attributes his success to closing institutions, eliminating 50,000 state jobs, and nearly eradicating public works. These austerity measures have led to reduced public spending, resulting in the country’s first budget surplus since 2010.
The pension and retirement sector has been disproportionately affected by these cuts, absorbing 19% of the total spending reduction, according to data from the Institute for Fiscal Analysis (IARAF).
In response, the Argentine Congress approved a 7.2% increase in pensions and retirements, which Milei has announced his intention to veto. This would be the second time he has vetoed a pension and retirement increase passed by Congress.
Key Questions and Answers
- What is the current inflation rate in Argentina? The inflation rate remained stable at 1.6% in June, following a 1.5% increase in May.
- How does Argentina’s inflation compare to previous years? The CPI accumulated a 15.1% rise in the first half of 2023, contrasting with a 79.8% increase during the same period in 2024.
- What sectors experienced the highest price increases in June? Education and services like gas, water, and electricity led the way with 3.7% and 3.4% increases, respectively.
- How has President Milei’s administration impacted inflation? He has managed to decrease inflation from 211% in 2023 to 118% in 2024, contributing to a reduction in poverty rates.
- What austerity measures has Milei implemented, and what have been their consequences? Milei closed institutions, eliminated state jobs, and reduced public works. These measures have led to a budget surplus but disproportionately affected pension and retirement sectors.
- What is the status of pension and retirement increases approved by Congress? Milei has announced his intention to veto a 7.2% increase in pensions and retirements, which would be his second veto of such increases passed by Congress.
