San Francisco Frontiers - Argentine annual inflation nosedives, in boost for Milei

Inflation, the perennial bugbear of South America's second-biggest economy, stood at 2.7 percent in December, up slightly from 2.4 percent a month earlier.

But it was the third straight month in which prices rose by less than 3 percent, the INDEC statistics institute said.

"In just 12 months we pulverized inflation," the Economy Ministry wrote on X, adding that "the data reflects the success of the stabilization plan" launched by Milei when he came to power wielding a chainsaw as a symbol of his plan to restore fiscal discipline and runaway prices.

A jubilant Milei at the time declared that the fast-rising prices, which have haunted Argentinians for decades, would soon be "little more than a bad memory."

During Milei's first month in office, inflation hit a record 25.5 percent after he devaluated the beleaguered peso by 52 percent.

But by November 2024, it had fallen to its lowest level in over four years on the back of a drastic austerity program, which has included firing over 33,000 public sector workers, halving the number of government ministries and vetoing inflation-aligned pension increases.

- 'Disinflation' -

His measures, which plunged Argentina into a deep recession, were accused of tipping an additional five million people into poverty in the first half of 2024 and brought tens of thousands of people onto the streets in protests.

Milei has swatted away criticism, however, insisting that what he presents as short-term pain will lead to long-term gains for the economy.

The month after he took office, Argentina produced its first monthly budget surplus in nearly 12 years.

Writing on X, Economy Minister said the figures showed "the continuity of the disinflation process."

He attributed the slight rise in December's prices to "seasonal" factors, linked to the end-of-year holidays and the southern hemisphere's summer holidays.

A.Clark--SFF