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Argentina: Inflation falls to lowest level since March 2021 in May
Latest reading: Inflation dropped to 43.5% in May, below April’s 47.3%. May’s result marked the lowest inflation rate since March 2021 and was below market expectations. The moderation was broad-based, with lower price pressures recorded for transportation, food and non-alcoholic beverages, restaurants and hotels, and housing and utilities.
Accordingly, the trend pointed down, with annual average inflation coming in at 111.4% in May (April: 128.9%).
Lastly, consumer prices increased 1.50% over the previous month in May, a smaller increase than the 2.78% increase seen in April. May’s result marked the weakest reading since April 2020 and was also below market expectations.
Panelist insight: BBVA analysts said:
“The successful easing of the FX restrictions without an exchange rate disruption deactivated the devaluation outlook, which contributed to anchor down the inflation expectations of price makers and made it possible to break the 2% m/m floor for the first time in more than four years. After the release of March’s inflation (3.7% m/m) and the announcement of the new program with the IMF, which incorporated a new exchange rate regime, we decided to raise the inflation forecast for 2025 from 30% to 35%. Given that the transition has been much smoother than expected we return to our previous scenario, with an inflation projection of 30% y/y for 2025.”
