In Buenos Aires, a recent Reuters poll of analysts revealed that Argentina's monthly inflation rate is expected to have reached its lowest point since President Javier Milei took office in late 2023, introducing challenging austerity measures. According to the survey, the consumer price index (CPI) is projected to have increased by 2.3% in January 2025, compared to 2.7% in December, marking the slowest monthly incline since mid-2020.
Argentina, renowned for its grain exports and growing energy production, has been combating triple-digit inflation, holding the unenviable title of having the world's highest annual inflation rate. Despite reaching nearly 300% early last year, the annual rate dropped to 118% by the end of 2024. Monthly inflation, which peaked around 25%, has lingered between 2% and 3% since October.
Analysts at the Argentine consultancy Eco Go forecasted: "Inflation in January will be 2.3%, consolidating the downward trend observed during 2024," attributing this to a tranquil start to the year and moderate upticks in utility prices. Analyst predictions for January's inflation levels ranged from a minimum increase of 1.9% to a maximum of 2.8%.
Reducing inflation is a top priority for Milei's administration, aiming to eliminate capital controls that have hindered business and investment. The government aspires to keep inflation below 2% to phase out controls, but analysts are cautious about the timeline for achieving this goal.
"We expect inflation to remain in line or slightly higher than January's levels, yet steadily decline throughout the year, possibly falling below the 2% mark in the latter half of the year," Eco Go stated optimistically.
Eugenio Marí, chief economist at the Fundación Libertad y Progreso, expressed a more positive outlook, forecasting a potential drop in inflation to 1.7% in February as guided by a controlled currency devaluation strategy known as a "crawling peg," slowing to 1% per month from its previous rate.
"February will be the month of the crawling-peg, which will help to slow down tradable prices; however, the key will be that the rest of the monetary policy must be consistent with the peso depreciating at that speed," Marí emphasized.