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Argentina's inflation rate slowed to 1.7 percent in August, according to the INDEC national statistics bureau. Prices have increased 33.5 percent over the past year and 21.3 percent so far in 2026. The August figure was below the 2.1 percent recorded in July, bringing inflation back to the downward trend the government had hoped for in the second half of the year.

Core inflation was at 1.8 percent, with increases linked to housing, rents, and other services. Regulated prices rose by 2.2 percent, mainly due to higher electricity, gas, public transport, and private healthcare costs. Seasonal prices fell by 0.9 percent, as lower holiday package and clothing prices offset increases in vegetables, tubers, pulses, and fruit prices.

Housing, water, electricity, gas, and other fuels had the largest monthly increase at 2.8 percent, followed by education at 2.5 percent. Recreation and culture saw no change, while clothing and footwear declined by 0.6 percent. Food and non-alcoholic beverages had the biggest impact on the monthly inflation figure, driven by higher vegetable, tuber, pulse, fruit, and bread and cereal prices.

President Javier Milei will likely be pleased by this news, which could boost his popularity after a challenging few weeks in the polls. The inflation rate had slowed from 2.9 percent in July and matched the national rate. Private sector analysts and economists had predicted a rate between 1.5 percent and 1.9 percent for August, with few expecting it to exceed 2 percent.

The Central Bank's REM market expectations survey, involving nearly 40 analysts, forecasted an average rate of 1.7 percent. President Milei had pledged that Argentina's monthly inflation rate would start with a "zero" by August 2026, though optimistic projections suggest such levels would not be achieved until 2027. Since taking office in December 2023, Milei has implemented austerity measures that have eliminated the country's chronic fiscal deficit and reduced annual inflation to around 30 percent within two years.

He has cut public spending, closed state agencies, enforced redundancies, and caused a decline in wages and pension purchasing power. Additional INDEC data this week revealed the challenges facing Argentina's industrial sector, highlighting the uneven nature of the country's economic recovery. Manufacturing output fell 4.9 percent year-on-year in July and was down 5 percent compared to June.

The decline was the sharpest recorded so far this year, with 12 of the 16 manufacturing divisions tracked by INDEC posting declines, with the steepest falls in other equipment, apparatus, and instruments (-31.4 percent), machinery and equipment (-26.7 percent), and clothing, leather, and footwear (-15.9 percent).