Buenos Aires, Argentina — Argentina’s monthly inflation rate fell sharply to a single-digit rate in April for the first time in half a year, data released Tuesday showed, a closely watched indicator that reinforces President Javier Milei’s harsh austerity program aimed at fix the country’s problematic economy.
Prices rose at a rate of 8.8% last month, the Argentine government’s statistics agency reported, down from a monthly rate of 11% in March and well below a high of 25% last December, when Milei assumed the presidency with the mission of combating Argentina’s dizzying crisis. inflation, among the highest in the world.
Although praised by the International Monetary Fund and applauded by market observers, Milei’s cost-cutting and deregulation drive has been squeezing in the short term families whose value of money has plummeted while the cost of almost everything has plummeted. shot. Annual inflation stands at 289.4%
“People are suffering,” said Agustín Pérez, 23, a supermarket worker in suburban Buenos Aires, who said his rent had skyrocketed 90% since Milei deregulated the housing market and his electricity bill had almost tripled since the crisis. The government cut subsidies. “They say things are getting better, but how? I don’t understand.”
Milei news on social media in recent weeks has become a torrent of good economic news: Argentine bonds post some of the best gains among emerging markets, officials celebrate their first quarterly surplus since 2008, and the IMF announces on Monday that will release another $800 million loan, a symbolic vote of confidence in Milei’s reform.
“The important thing is to score goals now,” Milei said Tuesday at an event at the presidential palace. “We are beating inflation.”
Still, some experts warn that falling inflation is not necessarily an economic victory, but rather the symptom of a painful recession. The IMF expects Argentina’s gross domestic product to contract by 2.8% this year.
“There has been a massive collapse in private spending, which explains why consumption has fallen dramatically and why inflation is also falling,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics who studies emerging markets. “People are worse than before. “That leads them to spend less.”
The signs of an economic slowdown are everywhere in Buenos Aires: the lines snaking outside discount markets, the empty seats in the city’s typically thriving restaurants, the growing strikes and protests.
In an open-air market in the Liniers neighborhood, Lidia Pacheco is attracted to a garbage can near the vegetable section. The 45-year-old mother of four children digs through the spicy pile to retrieve the tomatoes with the least amount of mold.
“This place saves me,” Pacheco said. The sky-high prices have forced her to change her diet and habits to the point of giving up yerba mate, Argentina’s ubiquitous national drink made from bitter leaves. “Everything I make selling clothes I use to eat,” she said.
Retail sales in the first quarter of 2024 fell almost 20% compared to the previous year, a pace comparable to the pandemic lockdowns of 2020. Beef consumption in Argentina, once a sacred staple, fell to its lowest level in three decades this quarter, the government reported, prompting panicked editorials about the fate of Argentina’s national psyche.
“Now I buy pork and chicken,” said Leonardo Buono, a 51-year-old hospital worker. “This economic adjustment is an intense shock.”
Milei, a self-proclaimed “anarcho-capitalist” and former television personality, warned everyone that his policies would hurt at first.
He campaigned brandishing a chainsaw to symbolize all the cuts he would make to Argentina’s bloated state, a dramatic change from successive left-wing Peronist governments that ran huge budget deficits financed by printing money.
Promising that the pain would pay off, he cut spending on everything from construction and cultural centers to education and energy subsidies, from soup kitchens and social programs to pensions and public enterprises. He has also devalued the Argentine peso by 54%, helping to close the gap between the official and black market exchange rates, but also fueling inflation.
Prices in stores and restaurants doubled in the first three months of 2024, the government statistics agency reported, reaching levels comparable to those in the United States and Europe.
But Argentine wages have remained stagnant or declined: The monthly minimum wage for regulated workers was just $264 as of this month, and informal economy workers often earned less. Today with that sum you can buy some good meals at Don Julio, a famous steakhouse in Buenos Aires. About 60% of the country’s 46 million people now live in poverty, the highest number in 20 years, according to a study conducted in January by the Catholic University of Argentina.
Despite growing discontent among many Argentines, the president’s approval ratings have remained high, around 50%, according to a survey this month by Argentine consulting firm Circuitos, possibly as a result of Milei’s success in blaming his predecessors for the crisis.
“It’s not his fault, it’s the Peronists who ruined the country, and Milei is trying to do the best he can,” said Rainer Silva, a Venezuelan taxi driver who fled his own country’s economic collapse for Argentina five years ago. “She’s like Trump, everyone is against her.”
Argentina’s powerful left-wing unions and political parties have responded to Milei with weekly street protests, but have failed to galvanize a broad sector of society. That could change: A mass protest against budget cuts to public universities visibly struck a chord, drawing hundreds of thousands of people and shaking the government.
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Associated Press writer Almudena Calatrava contributed to this report.
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