BUENOS AIRES (Reuters) -Argentina’s monthly inflation ticked up a tad in December, data showed on Tuesday, though the annual rate slowed further as libertarian President Javier Milei pushed tough spending cuts and austerity measures. The monthly rate, which came in at 2.7% as forecast by analysts, meant South America’s second-largest economy ended Milei’s first full […]
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Argentina inflation fight slows annual rate to 118%
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BUENOS AIRES (Reuters) -Argentina’s monthly inflation ticked up a tad in December, data showed on Tuesday, though the annual rate slowed further as libertarian President Javier Milei pushed tough spending cuts and austerity measures.
The monthly rate, which came in at 2.7% as forecast by analysts, meant South America’s second-largest economy ended Milei’s first full year in office with annual inflation of 117.8%. The rolling 12-month rate has been slowing from an April peak near 300%.
“We’re pulverizing inflation,” Argentina’s economy ministry said in a post on X.
Milei, who took office in December 2023, has launched a nationwide austerity push, slashing many public budgets. While poverty rates have increased, price rises have steadily slowed down from eye-popping double-digit increases each month.
Still, many Argentines feel the pinch to their wallets, with housing and utility costs leading the December price increases.
“People say inflation is going down, but here we always receive merchandise with different prices, it goes up and up,” said 77-year-old retiree Juan Carlos Gonzalez, who works at a produce stand to make ends meet.
Analysts said seasonal price rises were behind the slight acceleration from the 2.4% monthly inflation logged in November, and markets greeted the data as good news. Traders expect inflation to keep cooling in 2025.
The December data “confirms the disinflation process is continuing,” Economy Minister Luis Caputo said on X.
WHAT’S NEXT?
Traders have been betting that Argentina’s central bank will cut the interest rate from its current 32%. They also expect the government will slow the devaluation of the local peso currency.
The Argentine peso’s “crawling peg,” or monthly devaluation, is currently at 2%.
“If inflation is at around 2.5% or under, the government will reduce the crawling peg to 1%,” said broker Max Capital ahead of the inflation data’s release on Tuesday. “We also expect the central bank to cut the interest rate by around 500 basis points.”
While the central bank board meets every Thursday, a rate cut could come ahead of a Treasury tender on Wednesday, Max Capital added.
(Reporting by Kylie Madry, Hernan Nessi and Jorge Otaola; Additional reporting by Walter Bianchi, Miguel Lo Bianco, Horacio Soria and Juan Bustamante; Editing by Sarah Morland, David Gregorio and Cynthia Osterman)