MercoPress. South Atlantic News Agency

Argentine inflation projected to bounce back this month

A sharp drop in consumption amid uncertainties regarding a possible understanding with the IMF discourages experts from issuing optimistic projections

After Argentina's National Institute of Statistics and Census (Inec) announced Friday that the National Consumer Price Index (IPC) in February reached 2.4%, analysts in Buenos Aires foresee it to show another acceleration in March, potentially exceeding February's core inflation rate of 2.9%.

While the Libertarian administration of President Javier Milei keeps bragging about its achievements in this regard, experts underline that they came amid a significant drop in spending, with mass consumption falling by 10.2% last month.

Seasonal factors, such as the start of the school year and increased transport costs, contribute to price pressures. Economists suggest that ongoing currency uncertainties and economic adjustments are adding to inflationary challenges.

Consumption has declined nationwide for 15 consecutive months, with significant decreases in soft drinks, alcoholic beverages, and household items.

February 2025 saw a 9.8% year-on-year contraction, while supermarket and self-service store sales fell considerably. Despite this, the rate of decline has slowed since October 2024.

The basic food basket (CBA) rose by 3.2% in February, the highest increase in six months, surpassing the poverty-line basket's 2.3% increase. A typical family now needs AR$ 1,057,923 (about US$ 881.6 at the unofficial “blue” rate) monthly to avoid poverty and AR$ 468,108 (roughly US$ 309) to avoid indigence, reflecting ongoing economic challenges.

The Indec's report said inflation rose to 2.4% in February, up from 2.2% in January, accumulating a 66.9% increase over 12 months. Year-to-date, prices increased by 4.6%.

The divisions with the largest increases were Housing, Water, Electricity, Gas, and Other Fuels (3.7%), due to housing rent and utilities costs and Food and Non-Alcoholic Beverages (3.2%), largely driven by rising meat prices.

On the other hand, Household Equipment and Maintenance went up only by 1%, while Clothing and Footwear rose just 0.4%.

The highest regional variations were recorded in Patagonia (3.2%), Cuyo (2.7%), Northwest (2.6%), and the Pampas (2.5%), while the Greater Buenos Aires (2.2%) and Northeast (1.9%) fell below the national average.

The national inflation figure contrasts with Buenos Aires City, where inflation decreased to 2.1%, driven by a 4.8% drop in tourism-related services. However, Buenos Aires City experienced higher year-on-year inflation at 79.4%. In addition, unemployment in Buenos Aires grew by 50% in one year.

The Central Bank's (BCRA) latest report predicted inflation rates of 2.3% in February and 2.2% in March, marking a shift from prior downward trends.