FocusEconomics Warns of Potential Impact on Argentina’s Inflation
Analysts from FocusEconomics, a firm that compiles perspectives from leading local and international banks and consultancies, have stated that Argentina’s inflation will continue to be a significant macroeconomic challenge by the end of 2025. Market projections for both short-term and medium-term have been adjusted, prior to the revelation that July’s strong appreciation of the US dollar (+14%) did not affect August’s Consumer Price Index (CPI).
Current Inflation Situation
According to the National Institute of Statistics and Census (INDEC), the monthly inflation rate reached 1.9%, remaining unchanged from July, and accumulating a 19.5% increase year-to-date. This figure was below the adjusted forecast of the latest Market Expectations Survey (REM) by the Central Bank (BCRA), where analysts raised their estimates to project a 2.1% CPI.
FocusEconomics’ Outlook
The recent FocusEconomics report unveiled the forecasts of over 40 local and international banks and consultancies, aiming to anticipate what will happen by the end of 2025 and in 2026, given various economic factors. The experts noted that inflation should continue to decline due to fiscal moderation, improved market competition, relaxed import restrictions, and moderated international raw material prices.
However, they cautioned about a potential alert sign that could impact the deflation process. “The recent and significant peso depreciation will hinder a faster decline,” they explained.
Inflation Projections
As a result, panelists predict an average 42.1% increase in the 2025 price index, a decrease of 0.2 percentage points from their previous projection. For 2026, they forecast an average rise of 22.5%.
Impact of Currency Depreciation
Max Capital stated that July’s currency depreciation (around 13.2%) seems to have had little effect on August’s inflation, showing limited pass-through so far. However, they anticipate a greater impact from the dollar variation in September, as “the rate increase concentrated in the last week of July.”
They expect inflation to be near 2.3% month-on-month, aligning with high-frequency estimations.
LCG Consultancy’s Projection
LCG consultancy projects that inflation rates for the coming months will be “closer to the 2% zone than the 1% monthly mark.”
Key Questions and Answers
- What is the current inflation situation in Argentina? According to INDEC, the monthly inflation rate is 1.9%, accumulating a 19.5% increase year-to-date.
- How do analysts from FocusEconomics view Argentina’s inflation outlook? They predict that inflation will continue to decline due to fiscal moderation, improved market competition, relaxed import restrictions, and moderated international raw material prices.
- What is the potential alert sign that could impact deflation? The recent and significant peso depreciation will hinder a faster decline in inflation, according to FocusEconomics experts.
- What are the inflation projections for 2025 and 2026? Panelists predict an average 42.1% increase in the 2025 price index and a 22.5% average rise for 2026.
- How might currency depreciation affect inflation rates? Max Capital anticipates a greater impact from the dollar variation in September, as the rate increase concentrated in the last week of July.
- What does LCG consultancy project for inflation rates in the coming months? LCG projects that inflation rates will be closer to the 2% zone than the 1% monthly mark.
