Argentina inflation seen at 31-month low of 3.9% in August By Reuters

By Hernan Nessi

BUENOS AIRES (Reuters) – Argentina’s monthly inflation rate is expected to have edged down to 3.9% in August, a Reuters poll of economists showed on Monday, the lowest since the start of 2022 although only just below the 4% level registered the previous month.

The rate would be a sign of progress for the government of libertarian President Javier Milei that has been focused in taming runaway prices, though the marginal scale of the slowdown reflects how this is getting harder.

Analysts agree that a rise in consumer prices in the South American country last month was likely driven by higher service and transportation costs, according to the poll surveying 24 local and foreign analysts.

“Regulated prices once again pushed the inflation index upwards,” Fundacion Libertad y Progreso (LyP) said in a report, citing utilities costs for electricity and gas, along with public transport costs.

Projections for inflation last month ranged from a minimum 3.4% to a maximum 4.4%, the poll showed, implying both a median estimate and mean average of 3.9%.

Since the inauguration of right-wing economist Milei in December, inflation has steadily slowed from 25.5% that month to 4.2% in May, 4.6% in June and 4.0% in July, though some economists say the process appears to have stagnated.

“The slowdown in place since the beginning of the year is starting to get more complicated,” consultancy EcoGo said. “With core inflation ‘stagnant’ at around 4% since May, August does not seem to have been able to break with that trend.”

September, however, may provide some good news on the inflation front after the government late last month announced it was cutting a tax on imports and freight cargo to 7.5% from 17.5% previously, economists note.

“We expect the tax cut to have an impact in September on the prices of imported goods and, to a lesser extent, on services that use imported inputs,” said LyP director Aldo Abram.

Argentina’s national INDEC statistics agency is set to release its August inflation data on Wednesday.