Argentina: Inflation Fell Under 4% in September, Down 22% in 9 Months

The National Institute of Statistics and Census of Argentina (INDEC) announced on Thursday that the country’s inflation rate for September was 3.5 percent.

September’s result marks the lowest inflation rate recorded in Argentina since November 2021 and is the result of President Javier Milei’s “shock therapy” economic measures that have steadily reduced inflation from 25.5 percent at the time he took office in December 2023 to September’s 3.5 percent.

Milei’s policies aim to overturn Argentina’s years-long economic crisis exacerbated under leftist governments, which dramatically worsened during the administration of Milei’s predecessor, socialist former President Alberto Fernández (2019-2023).

Under Fernández, inflation was 12.7 percent during September 2023. By the time he left office in December, Argentina was on the verge of a complete economic collapse, with 1,020 percent total inflation accumulated throughout his four-year term.

The latest inflation measurements also mark the first time inflation has dropped below four percent under Milei, going down 0.7 percent from August’s 4.2 percent and breaking a four-month streak of inflation hovering around four percent. The Argentine Economy Ministry explained that, while inflation was at 3.5 percent, core inflation, which excludes regulated and seasonal components, was 3.3 percent.

INDEC, a decentralized entity within the Argentine Economy Ministry, revealed in its latest detailed monthly breakdown that the month’s inflation rate was calculated from the average of several categories that the institute keeps track of. Housing, water, electricity, gas and other fuels experienced the highest increases at 7.3 percent, followed by clothing and footwear at six percent. The increases are reportedly attributed to increases in housing, rent, and related expenses, while the spike in clothing inflation is attributed to the change of season. Argentina, located in the Southern Hemisphere, entered spring in late September.

The categories where inflation was the lowest, INDEC informed, were food and alcoholic beverages at 2.3 percent, alcoholic beverages and tobacco at 2.2 percent, and recreation and culture at 2.1 percent.

President Milei, Economy Minister Luis Caputo, and other members of the Argentine government celebrated INDEC’s announcement on social media.

“Inflation going down without first going through a hyper[inflation]; without expropriation of assets; without setting the exchange rate; without controlling prices; by recomposing relative prices. You’ve never seen inflation fought like this before. It takes a little longer but it is genuine. Long live liberty, damn it!” Milei said on Thursday. The president posted a chart illustrating the dramatic drop in inflation in Argentina during the first nine months of his administration.

Economy Minister Caputo pointed out that September marked the lowest inflation since November 2021 and stressed that the “the deflation process continues and the course of fiscal and monetary orthodoxy will not change.”

“Can’t you see it yet? 3.5% inflation! Do you realize why it is necessary to maintain a balanced budget? Because this means that millions of Argentines pay less for all the products they buy,” Security Minister Patricia Bullrich said, adding that “this is not for one, it is for all.”

Milei has insisted that his “zero deficit” fiscal goals for Argentina are “non-negotiable,” a pursuit he reiterated last week when he vetoed a university financing bill that the government branded as “irresponsible” and a danger to the nation’s fiscal balance. Milei reaffirmed that he would veto any bill that infringes upon fiscal balance. The veto was upheld by the Argentine Congress on Wednesday.

Milei’s policies, in addition to steadily reducing inflation over the past nine months from 25.5 percent in December 2023 to 3.5 percent in September, also allowed Argentina to experience its first Gross Domestic Product (GDP) surplus since 2008, overturning a 15 percent GDP deficit that the country faced at the time he took office in December.