Argentina’s inflation slows to 8-month low of 2.1% in May, easing pressure on Milei
Consumer prices rose just 2.1% in May, the lowest monthly rate since September, as President Milei’s austerity measures continue to curb price increases, though annual inflation climbed to 33.2%.
Argentina’s inflation rate fell to 2.1% in May, the slowest monthly pace in eight months, offering a reprieve for President Javier Milei who has staked his political fortune on taming prices. The data from the INDEC statistics agency came in below market forecasts and followed a 2.6% rise in April, reinforcing a disinflation trend that was briefly derailed by an energy price shock in March linked to the Iran war.
Inflation breakdown
Communications costs led the monthly rises with a 3.4% increase, driven by higher telephone and internet bills. Education followed at 2.9%, while food and non-alcoholic beverages, a weighty category in the index, rose 2.5% on dairy and bread. Housing and utility prices, including fuel and electricity, advanced 2.4%. The smallest gains were in clothing and footwear (0.3%) and alcoholic beverages and tobacco (0.8%).
- Communications
- 3.4 %
- Education
- 2.9 %
- Food & beverages
- 2.5 %
- Housing & utilities
- 2.4 %
- Alcoholic beverages & tobacco
- 0.8 %
- Clothing & footwear
- 0.3 %
Core inflation, which strips out volatile seasonal and regulated items, dipped below the 2% threshold to 1.9%, a point celebrated by Economy Minister Luis Caputo. Seasonal prices, however, jumped 3.5% due to vegetable costs.
Political backdrop
The slowdown provides political oxygen for Milei, whose government has been battered by a series of corruption scandals and sagging economic activity in retail and manufacturing. “Let’s goooooo Toto!” Milei posted on social media, referencing Caputo’s nickname. The minister, meanwhile, struck an upbeat tone in recent appearances, telling supporters:
He has also predicted annual inflation would fall to around 20% in the coming months.It will be an absolutely atypical election year because the economy will for the first time sweep politics aside.
Credit rating boost
Adding to the positive news, S&P Global upgraded Argentina’s sovereign credit rating to B- stable from the CCC category late Wednesday, citing the government’s success in meeting debt repayments. The move, while still leaving the country several notches below investment grade, advances Milei’s goal of returning to global capital markets after a ninth sovereign default in 2020.
Lingering challenges
Despite the improvements, the annual inflation rate edged up to 33.2% from 32.4% in April as the base effect of a very low 1.5% reading in May 2025 fades. Consumer prices remain high enough in dollar terms to make Buenos Aires one of the most expensive cities in the region. Real wages have failed to keep pace, and unemployment has ticked upward as cheap imports flood the market and domestic manufacturers shed jobs. Private economists surveyed by the central bank still expect inflation to end 2026 at around 30.5%, far above the government’s initial budget assumption of 10%.
