Argentina monthly inflation rises to 1.9% in September, matching market estimates

Argentina's monthly inflation rate increased slightly to 1.9% in September, aligning with market predictions and remaining below a crucial marker for two consecutive months. This trend underscores the government's ongoing efforts to stabilize prices domestically. The Consumer Price Index (CPI) rose to 1.9% from 1.7% in August, mirroring the median forecast from economists surveyed by Bloomberg.

On an annual basis, headline inflation saw a marginal decline to 33.4%, indicating a steady downward trend despite economic challenges. The primary factors contributing to the monthly increase were regulated tariffs and service costs, with utility rates leading all categories. Housing, water, electricity, and gas prices climbed by 3.1% in September following recent adjustments across regional distribution networks.

Additionally, education expenses grew by 3.0%. Conversely, seasonal goods helped mitigate inflation, with core inflation slowing to 1.7% for the month. Food and non-alcoholic beverages, the most significant category in the consumer basket, grew by 2.0%, serving as the main catalyst for price increases across most provinces outside the Greater Buenos Aires metropolitan region.

These inflation figures come amid a weakening economic backdrop, with Argentina grappling with a recession in the second quarter. Economists surveyed by the central bank now expect another contraction in the third quarter, potentially placing the nation in a technical recession. Consequently, growth expectations have been significantly revised downward, with full-year GDP expansion for 2026 now projected at 1.5%, roughly half the initial projections at the start of the year.

Despite the slowdown, market consensus remains that the disinflation trend will persist in the near term. Central bank surveys suggest that monthly CPI fluctuations are expected to fluctuate between 1.6% and 1.8% through March 2027, with annual inflation projected to gradually decline toward 30% by the end of the year. Investors are now focusing on incoming third-quarter activity data and central bank policy responses to determine if disinflation can continue without further jeopardizing economic recovery.