Inflation down sharply after a year in power of Javier Milei

Inflation in Argentina stood at 117.8% in 2024, a spectacular drop of 94 points compared to the previous year, which ultraliberal President Javier Milei is proud of, even if this drop is still far from be felt by all.

The price increase in December (+2.7%) published Tuesday by the National Institute of Statistics (Indec), although up slightly compared to November (+2.4%), continues the strong trend, continues , which has been decelerating for several months.

For the third consecutive month, inflation is contained below 3%, the lowest levels in three years in Latin America’s third largest economy. Even if at 117.8% over twelve months, it remains one of the highest in the world. But the dizzying index of 2023 (211.4%) has almost been halved.

“In barely 12 months, we have pulverized inflation,” trumpeted Economy Minister Luis Caputo on X, welcoming “a promise kept” and “the bases for sustainable growth” for Argentina.

In one year, the “anarcho-capitalist” economist-panelist turned president Javier Milei, who regularly boasts of achieving “the greatest (budgetary) adjustment in the history of humanity,” has regained budgetary balance in a pathologically indebted country.

But at the cost of a “shock therapy” promised during his “anti-caste” presidential campaign: a strong devaluation of 54%, drastic cuts in public spending, posts or subsidies, and the drying up of monetary issuance. .

After a peak in inflation in December 2023 (+25.5%) in the wake of the brutal devaluation, inflation began a gradual but constant deceleration: +13.2% in February, +8.8% in April , since May less than 5%, and since October less than 3%.

Collateral victims of this budgetary austerity: purchasing power, employment – ​​more than 250,000 formal positions lost, according to labor registers – and economic activity, which have mired in recession an Argentina where poverty was affecting in the first half of 52, 9% of the population.

Poverty has been decreasing in recent months, says the government, citing the -controversial- figure of 38.9%, while the Specialized Observatory of the Catholic University cites a figure slightly below 50%, but recalls that for six years a floor threshold of 33% of poor people seems insurmountable.

The fact remains that many Argentines have been doing their shopping in recent months without the fear of labels jumping from one month to the next, like in 2022 or especially 2023. “I go to the supermarket knowing that what I am going to buy will cost more or less the same as a few months ago,” Sofia Meza, 23, explains to AFP.

Imperturbable, even triumphant, Javier Milei promised at the end of 2024 that he would continue “full on with the chainsaw” in 2025 in public spending, this time in “geological layers of unjustified state bodies and functions”.

He also promised a recovery in activity in 2025, of 5% (the International Monetary Fund predicts a recession of 3.5% in 2024), facilitated in particular by a stabilized peso. Javier Milei, convinced of a mission against “global socialism”, both economically and politically, was reinforced in his management by the regular satisfaction of the IMF.

In December, he welcomed “the impressive results” of the economic stabilization program over the past year, with “a visible reduction in inflation, a budget surplus, an improvement in international (foreign exchange) reserves”, and a “recovery of activity and real wages” in progress.