Argentina’s May inflation rate dropped to 1.5 percent, the lowest monthly rate in almost five years, according to the INDEC national statistics bureau. This follows a significant reduction from the 25 percent increase seen in President Milei’s first month in office and represents a considerable decrease from the 211 percent annual inflation rate at the end of 2023. The decrease is attributed to the government’s austerity measures, including fiscal discipline and the elimination of exchange controls. However, despite the positive inflation figures, Argentines continue to struggle with stagnant wages and a decreased purchasing power.
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December’s US inflation rate rose to 2.9%, driven largely by a 40%+ surge in energy prices and a staggering 36%+ increase in egg prices due to avian flu. However, core inflation remained lower than anticipated at 3.2%, easing concerns of a renewed inflation wave. This relatively positive data, contrasting with strong job growth, created uncertainty regarding future Federal Reserve interest rate cuts. Market reactions were initially positive, but anxieties persist about potential inflationary pressures from upcoming policy changes.
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Argentina’s November inflation rate reached a four-year low of 2.4%, a significant decrease from October’s 3% and a continued decline since December 2023’s 25.5% spike following a peso devaluation. While year-to-date inflation remains high at 112%, the sectors with the largest monthly price increases were education, housing and utilities, and food and beverages. The government celebrated this drop as a step towards inflation stabilization, a claim echoed by President Milei.
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John Q. Hosedrinker