Argentinas inflation in 2025 fell to 31.5%, the lowest in 8 years

Prices in Argentina increased 31.5% in 2025, the lowest inflation rate since 2017, according to a report by the INDEC statistics bureau. Although the rate is still high by international standards, inflation has decelerated during Javier Milei’s presidency. The figure is over 86 points lower than 2024’s 117.8%, the first full year of his mandate, and 180 lower than 2023’s 211.4%, the last year Peronist Alberto Fernández was in office. Monthly inflation in December was 2.8%. The sector with the biggest increase was transportation, which jumped by 4%. Milei won the presidential runoff in November 2023 with the promise of eradicating inflation. That month alone, prices increased by 8.3%. Argentina’s inflation statistics between 2006 and 2015 are not reliable because of state interference with the measurements. Critics have said that Milei’s strategy to curb inflation consists of keeping the peso artificially strong and freezing salaries, leading to plummeting purchasing power. The situation has resulted in critical declines across several industries.  Milei has said that inflation has come down during his presidency mainly due to state cuts under his “chainsaw” campaign. “The stabilization program based on fiscal surplus, strict control of the money supply, and capitalization of the Central Bank of Argentina will continue to be the pillars for continuing the disinflation process,” Economy Minister Luis “Toto” Caputo posted on X. “This is the only viable path to definitively eradicating inflation and making Argentina great again,” he added, echoing U.S. President Donald Trump’s motto. However, the government will face several challenges going forward, analysts say. With December’s data, monthly inflation has now remained flat or risen for the past eight months. When measured over the preceding 12 months, inflation has been flat at slightly above 31% since October. Balanz, a major Argentine broker, said in a statement that even though December’s monthly figure was “above market expectations,” they “expect monthly inflation to resume its downward trajectory during the first quarter of 2026, as the impact of the increase in meat and transport prices fades.” However, not everybody agreed. Last month, the Central Bank announced it would update the currency bands (the upper and lower thresholds between which the peso can float without the monetary authority’s intervention) according to the inflation rate, instead of expanding them by 1% a month. The government’s economic team had designed an economic plan that assumed inflation would converge at around 1%, but this is off the cards for the moment, according to Florencia Fiorentin, head economist at the Epyca consulting firm. She said that the new, inflation-indexed scheme was an “admission” that inflation will increase in the coming months. Without the exchange rate as an anchor to stop inflation, the government will continue to use “salaries, fiscal adjustment, and with that, a fall in mass consumption” to stave off inflation, Fiorentin said. Moreover, starting in February (when January’s numbers will be published), the INDEC will use a new basket of goods to calculate inflation. Services and transportation will have a greater weight on the index.  The Center of Argentine Political Economy (CEPA) calculated that, if this methodology were to have been used since Milei took office, inflation would have increased by an extra 11% overall since December 2023. Since the agency will only use the new calculation from next month onwards, that additional increase will be “swept under the rug.”