Argentina’s Inflation Drops to 84% After President Milei’s Economic Overhaul

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Argentina’s inflation rate has significantly declined, with monthly inflation dropping to 2.2% in January—the lowest level since mid-2020. This milestone comes just over a year after libertarian President Javier Milei took office, implementing stringent austerity measures to stabilize the struggling economy.

The latest hike in the consumer price index narrowly missed expectations at 2.3% and was down from 2.7% in December. It is a significant victory for Milei, who wants to sustain economic momentum while he is bargaining with the International Monetary Fund (IMF) for a new deal.

Argentina grappled with hyperinflation for decades, having at one point the world’s worst 12-month inflation rate. Early last year, the 12-month inflation rate approached 300% but in January had fallen back to 84.5%, according to the INDEC statistics agency. Monthly inflation, which reached nearly 25% at its worst, has averaged between 2% and 3% since October.

Reducing inflation is a top priority for Milei’s administration, as it aims to lift capital controls that have hindered investment and business growth. The government hopes to sustain inflation below 2% before easing these restrictions, though analysts remain cautious about the timeline.

“We predict inflation to stay near present levels or slightly higher than January’s figure,” said Argentine economic advisory firm Eco Go. “Although, the fall should continue throughout the year and perhaps break the 2% barrier in the second half of 2025.”

Fundacion Libertad y Progreso chief economist Eugenio Mari was even more optimistic, predicting the inflation rate for February to drop to 1.7%. He cited the managed “crawling peg” currency devaluation, which slowed down to 1% a month from its previous rate of 2%.

“February will be crucial for the crawling peg, helping to curb tradable prices,” Mari stated. “However, maintaining a consistent monetary policy aligned with the peso’s controlled depreciation will be essential for long-term stability.”