Argentina inflation, world’s highest, slows down in boost for Milei

By Thomson Reuters Mar 12, 2024 | 2:55 PM

By Jorge Otaola and Miguel Lo Bianco

BUENOS AIRES (Reuters) -Argentina’s monthly inflation rate slowed down more than expected to come in at 13.2% in February, a boost for libertarian President Javier Milei who is pushing tough austerity to try to tame the world’s fastest-rising prices.

The still sky-high monthly rate, published on Tuesday, marks a deceleration from January, when prices rose 20.6%, and December, when they were up 25.5%. Analysts polled by Reuters had expected February’s inflation rate to land at around 15%.

The 12-month rate through February, however, rose to 276.2%, below a poll forecast of 282.1%, but cementing Argentina’s position as having the world’s worst inflation, which is hammering people’s spending power and driving up poverty.

“The impact of the cost of food is just brutal,” said Ines Ambrosini, a 62-year-old who shops in wholesale markets to find deals. “Everything costs a lot of money, the food, the fruit, the vegetables, the meat, the dairy products.”

Milei, battling an inherited crisis, has rolled out some tough measures to combat inflation, including painful cuts to state spending, targeting subsidies for things like utilities and transport, while looking to streamline welfare programs.

His government devalued the peso by over 50% in December, which caused prices to leap even faster, so he needs to demonstrate – and quickly – that his economic plan is bearing fruit to keep people onside and avoid unrest on the streets.

Sandra Boluch, a fruit and vegetable seller at a market in Buenos Aires, said she was seeing a worrying trend as inflation soars: sliding sales and more people scavenging for what she throws away, hoping to find enough for a meal.

Poverty is heading toward 60%, according to a report in February, while UNICEF warned on Tuesday that child poverty in Argentina could even hit 70% in the first quarter of the year unless protections were strengthened.

“We have some containers in the back where the garbage is disposed of and when you go with a box, you see 20 people coming up to you to see what they can take as a plate of food to their table,” said Boluch, adding that the numbers coming was rising.

“The truth is that it’s something very tough, very sad because there are a lot of people and a lot of older people.”

Milei’s office on social media platform X said after the data was published that the slowdown was due to the government’s work to impose “strong fiscal discipline.” In a sign of confidence on inflation, the central bank late on Monday cut the interest rate to 80% late.

However, the president has signaled that March could be “complicated,” as signals in the economy have looked bleak, with tumbling sales, activity and production.

(Reporting by Hernan Nessi and Aida Pelaez-Fernandez; Editing by Kylie Madry, Adam Jourdan and Jonathan Oatis)