Argentina Inflation Slows to 2021 Levels in Win For Milei

(Bloomberg) -- Argentina’s monthly inflation reached the lowest level since late 2021, scoring a significant win for President Javier Milei as he makes lowering price spirals the centerpiece of his administration.

Most Read from Bloomberg

Consumer prices rose 3.5% in September from August, below the 3.6% median forecast of economists surveyed by Bloomberg. Annual inflation slowed to 209%, according to government data published Thursday. Inflation had hovered around 4% since May.

Housing and utilities led monthly price hikes, followed by clothing and education.

“Inflation was pretty level across the country and core inflation went down, which is a positive data point that obviously breaks the 4% barrier,” said Maria Castiglioni, director of consulting firm C&T Asesores in Buenos Aires.

In September, Milei slashed the country’s main import tax from 17.5% to 7.5%, while the gap between the official exchange rate and the parallel rate, which also affects prices, narrowed. Milei has said he would get rid of the import tax altogether by the end of the year. He insisted this week that capital controls, and the peso’s 2% monthly depreciation rate, will remain in place, which also help keep a lid on inflation.

Meanwhile, Milei marched on with subsidy cuts. Train fares jumped nearly 40% last month, with the minimum ticket rising from 200 to 280 pesos. Water, gas and electricity prices all picked up by around 4% as the president also reined in long-existing government aid, with gas prices seeing marginal increases, too.

Milei’s victory lap is expected to continue, with economists forecasting that annual inflation will drop sharply to 40.9% in the next 12 months, according to a monthly survey conducted by the nation’s central bank. The central bank’s survey posted Oct. 4 shows economists expect annual inflation to fall to 123.6% by the end of 2024.

(Updates with report breakdown in third, comment in fourth paragraph)

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.