Argentina posts second straight month of inflation below 2%

Argentina's inflation rate fell below 2% for the second consecutive month in September, according to government data published on Tuesday. Consumer prices rose by 1.9% last month, matching the median forecast of analysts questioned by Bloomberg. Compared to a year ago, annual inflation decreased to 33.4%, the lowest since President Javier Milei took office three years ago during a period of triple-digit price increases.

Food costs, which are heavily weighted in the inflation index, remained slightly above the headline figure, while utilities and education were the biggest contributors to price increases. Milei has made curbing inflation his top priority since assuming office.

However, the measures taken to control inflation, such as strengthening the exchange rate, implementing tight monetary policy, and pursuing fiscal austerity, have also slowed economic growth. Despite the recent moderation, a critical question remains: Is the trade-off on growth worth it? Economists believe the underlying real appreciation supporting the trend may not be sustainable and do not anticipate disinflation to persist in the coming quarters.

Argentina's economy shrank in the second quarter, and economists surveyed by the Central Bank expect another contraction in the third quarter, which would signal a technical recession. The country is projected to grow by 1.5% in 2026, roughly half of the growth rate anticipated at the beginning of the year. Monthly inflation is expected to remain between 1.6% and 1.8% through March 2027, according to the Central Bank's survey. Price increases are anticipated to ease by the end of the year to an annual rate of 30%.