Argentina’s Inflation Outlook: Rebound Anticipated Amid Economic Pressures

Argentina’s inflation is projected to rise beyond February’s 2.4% rate due to seasonal factors and economic uncertainties. The consumer spending decline, down 10.2% last month, raises concerns amid increasing costs for essentials, particularly in housing and food. Buenos Aires City contrasts with national trends, showing both inflation decline and heightened unemployment.

Argentina’s National Institute of Statistics and Census recently reported a 2.4% rise in the National Consumer Price Index for February, prompting analysts in Buenos Aires to anticipate further inflation acceleration in March, potentially exceeding February’s core inflation rate of 2.9%. Although the administration of President Javier Milei highlights their achievements regarding inflation, experts note that these occurred alongside a significant decline in consumer spending, with mass consumption down by 10.2% last month.

Seasonal influences, such as the onset of the school year and rising transportation costs, are contributing to inflationary pressures. Furthermore, continuing currency instability and necessary economic adjustments exacerbate these inflation challenges. National consumption has experienced a consistent decline for 15 months, particularly affecting soft drinks, alcoholic beverages, and household products.

In February 2025, the year-on-year economic contraction registered at 9.8%, with substantial drops in sales at supermarkets and self-service stores; however, the rate of decline has slowed since October 2024. The Basic Food Basket (CBA) increased by 3.2% in February, the most significant rise in six months, outpacing the 2.3% increase in the poverty-line basket. A typical family now requires AR$ 1,057,923 (approximately US$ 881.6 at the unofficial “blue” rate) monthly to escape poverty, while AR$ 468,108 (around US$ 309) is necessary to avoid indigence.

According to the Indec report, inflation accelerated to 2.4% in February from 2.2% in January, contributing to a cumulative increase of 66.9% over the preceding 12 months. Year-to-date inflation reached 4.6%. The most significant increases were observed in Housing, Water, Electricity, Gas, and Other Fuels (3.7%), primarily due to rising rent and utility costs, alongside Food and Non-Alcoholic Beverages (3.2%), driven largely by rising meat prices. Conversely, Household Equipment and Maintenance saw only a 1% rise, while Clothing and Footwear experienced a mere 0.4% increase.

Regional variations in inflation were pronounced, with Patagonia recording the highest increase at 3.2%, followed by Cuyo at 2.7%, Northwest at 2.6%, and the Pampas at 2.5%. However, Greater Buenos Aires and the Northeast lagged with 2.2% and 1.9% increases, respectively, below the national average. In contrast, inflation in Buenos Aires City declined to 2.1%, reflecting a 4.8% drop in tourism-related services; nevertheless, year-on-year inflation in the city remained high at 79.4%. Additionally, unemployment in Buenos Aires surged by 50% within one year.

The Central Bank of Argentina’s latest report projected inflation expectations of 2.3% for February and 2.2% for March, indicating a deviation from earlier downward trends.

In summary, Argentina is witnessing a projected rebound in inflation, driven by various factors including seasonal influences and economic adjustments. Despite claims of progress by the current administration, the reality is a significant decline in consumer spending and rising costs of essential goods, compounded by a concerning level of unemployment and regional economic variations. The ongoing struggle with inflation poses significant challenges for the Argentine populace as they navigate economic instability.

Original Source: en.mercopress.com