MercoPress. South Atlantic News Agency

Argentina: Indec says January's inflation stood at 2.2%

Milei's Libertarian government seeks to further reduce inflation through exchange rate control, wage policies, and fiscal anchors

Argentina's inflation in January 2025 stood at 2.2%, down from 2.7% in December, the National Institute of Statistics and Census (Indec) said in a report released Thursday, which also showed yoy values of 84.5%. January's was the lowest Consumer Price Index (CPI) since July 2020 - 1.9% amid the Covid-19 pandemic - and also the best under Javier Milei, who took office on Dec. 10, 2023. The President's best previous CPI was in November 2024 at 2.4%.

The highest incidence was due to the increase in utilities and tourist items. The most significant price rises were recorded in Restaurants and Hotels (5.3%) and Housing, Water, Electricity, Cooking Gas, and Other Fuels (4%). Food and Non-Alcoholic Beverages saw a 1.8% increase. Education went up 0.5% and Clothing and Footwear fell 0.7%, thus becoming the smallest variations. The Core CPI went up 2.4%, while the Seasonal measurements increased 0.6%.

Milei's Libertarian government seeks to further reduce inflation through exchange rate control, wage policies, and fiscal anchors. However, rising meat prices may moderate these effects, it was explained in Buenos Aires.

Retail sales showed mixed results, with SMEs seeing a rebound, but overall consumption declined, reflecting the economic challenges faced by Argentine households. Supermarket sales went down by 5-6% interannually in January 2025, continuing a trend from previous years but retail sales in smaller businesses saw a rebound, however insufficient to offset previous declines. According to the Argentine Confederation of Medium-Sized Companies (CAME), a year-on-year rebound of 25.5% was recorded in January. If the trend continues, supermarket sales would have dropped by almost 15% in volume.

In addition, the government is lowering the crawling peg - the mechanism whereby the parity between the Argentine peso and the US dollar is regulated - to a monthly 1% to further control inflation.

The elimination of the so-called PAIS tax - a surcharge on credit-card and other transactions abroad to level up the “blue” (a euphemism for “black market”) dollar's quotation with the official one coupled with a lagging exchange rate was also singled out in Buenos Aires as a factor aiding to the inflationary recoil.

Economy Minister Luis Toto Caputo had predicted inflation would stand at 2.3% and with Thursday's figures, the index is expected to keep decreasing.

See also: US dollar not lagging, says Caputo