Argentina’s monthly inflation increased at a rate below expectations, influenced by significant electoral activity in Buenos Aires Province that has contributed to fluctuations in currency stability. In August, consumer prices experienced a 1.9 percent increase compared to July, slightly under the two percent median forecast from economists, aligning with the figures reported for July.
Annual inflation decelerated to 33.6 percent, as indicated by government data released on Wednesday. Last month’s volatility prior to the vote, in which the libertarian party was defeated by its leftist Peronist competitors by nearly 14 percentage points, prompted the government to ultimately intervene in Argentina’s currency market. In August, Congress reversed several of Milei’s vetoes concerning spending bills, indicative of his declining backing within the legislature. Argentina experiences a robust debt auction following a local election that triggered a market downturn.
Argentina successfully conducted a robust debt auction following a local election that triggered a market downturn. Following the vote on Sunday, the currency experienced additional weakening, approaching the upper threshold of a range within which the peso operates freely, in accordance with a US$20-billion arrangement with the International Monetary Fund. Milei has a remaining period of six weeks leading up to the significant midterm elections on October 26, during which Argentines will be tasked with renewing nearly half of the congressional seats. In an effort to mitigate currency volatility in August, Argentina’s monetary authority implemented stricter policy measures for banks.
This included increasing the required percentage of deposits that banks must hold at the Central Bank and endorsing record-high interest rates in several Treasury auctions. President Milei intends to initiate a reset through a nationwide broadcast addressing the budget. According to an August Central Bank survey of economists, Argentina is projected to conclude the year with an annual inflation rate of 28 percent. Growth is anticipated to reach 4.4 percent.