MercoPress. South Atlantic News Agency

Argentina's inflation in July stands at 1.9%

There is not enough cash in circulation to validate widespread increases

Argentina's Consumer Price Index (CPI) rose 1.9% in July, bringing the year-on-year inflation to 36.6% and the year-to-date figure to 17.3%, according to a report from the National Institute of Statistics (Indec) released Wednesday in Buenos Aires. This marks the third consecutive month with a monthly inflation rate below 2%, a trend not seen since late 2017.

The highest monthly increases were in the Recreation and Culture division (4.8%), followed by Transport and Restaurants and Hotels (both at 2.8%). While Food and non-alcoholic beverages rose 1.9%, it had the biggest impact on the overall index. Clothing and Footwear was the only division to show a decrease, falling by 0.9%.

Core inflation, which excludes regulated and seasonal prices, was 1.5%, the lowest since January 2018. This data was celebrated by President Javier Milei and Economy Minister Luis Toto Caputo, who highlighted the positive trend.

“Important. The National CPI registered a variation of 1.9% in July, falling below 2% for the third consecutive month. This dynamic has not occurred since November 2017,” Caputo wrote on social media.

The Indec report also notes that the recent 14% rise in the dollar had a limited impact on July's prices because the increase occurred late in the month. Analysts and the government expect the full effect to be seen in the August CPI report.

So far this year, Education led the increases with 38.1%, followed by Housing, Water, Electricity, Gas, and Other Fuels (21.7%), and Recreation and Culture (20%). The smallest increases were in Clothing and Footwear (8.9%) and Household Equipment and Maintenance (10.3%). In the interannual comparison, Education topped the list with a 70.6% increase.

Despite the 13% increase in the dollar in July, accentuated in the last week of the month and the first week of August, companies warned that weak consumption and trade liberalization limit the possibility of passing on this increase to prices because there is not enough cash in circulation to validate widespread increases.