Argentina: Inflation falls to lowest level since January 2021 in June
Latest reading: Inflation came in at 39.4% in June, down from May’s 43.5%. June’s result marked the weakest inflation rate since January 2021 and surprised markets to the downside. The moderation was broad-based, with lower price growth recorded for food, housing and utilities, hospitality, recreation and transport; housing price pressures saw the most significant moderation from the prior month.
Annual average inflation fell to 96.0% in June (May: 111.4%).
Lastly, consumer prices increased 1.62% over the previous month in June, accelerating from May’s 1.50% rise.
Outlook: Our panelists expect inflation to continue to fall in what remains of 2025. The government’s commitment to tight fiscal and monetary policy will keep the economy’s liquidity levels in check. The easing of import controls plus subdued global commodity prices and a high base effect will also help cool inflation this year. That said, single-digit inflation rates will likely not be seen before 2029 at the earliest. The main risk to price pressures is the peso depreciating by more than expected due to global trade shocks and uncertainty ahead of October’s midterm elections.
Panelist insight: EIU analysts noted:
“The government’s commitment to fiscal balance, abandonment of price controls and gradual reduction in subsidies, as well as the use of tight monetary policy, will be drivers of disinflation in 2025-26. Even so, the path towards single-digit inflation will be slow, driven in part by a high level of indexation in the economy with wages and pensions tied to past inflation, as well as the easing of subsidies that will keep price pressures elevated.”