Buenos Aires:

Argentine inflation has dipped to 193%, landing below the 200% threshold for the first time in close to a year, data from statistics agency INDEC showed on Tuesday, as President Javier Milei’s dramatic austerity agenda bears fruit.

Slowing inflation, pulled back in part by the government’s dramatic public spending adjustments, has however come at the cost of consumption in a battered economy where more than half of the country has fallen into poverty.

Data from INDEC showed that monthly inflation slowed to 2.7% in October from 3.5% the previous month, its lowest since November 2021. The annual rate dipped below 200% for the first time since November last year.

While rent and utility costs drove monthly price rises, up 5.4%, prices in transport, food and non-alcoholic drinks rose just 1.2% from the previous month.

But the good news can be hard to grasp for Argentines who have had to tighten their belts to make it to the end of the month.

The government has slashed subsidies on public services, and increased public sector layoffs. Inflation is still very high by global standards and has contributed to a deep fall in purchasing power.

“Sales have been dropping a lot, perhaps people come more to buy on a daily basis, small quantities, and you can see the difference,” said Maria Sunilda Correa, who works in a poultry store.

Consumers are buying less beef in the famously steak-loving country after Milei ended the previous government’s freeze on beef prices. Beef consumption fell in the first six months of the year to its lowest level in 13 years, according to a report by industry group Ciccra.

“The price of meat has not gone up these months because there is very little consumption. As consumption goes down, sales also go down. And well, it is a bit complicated,” said Gabriel Segovia, a 52-year-old butcher in Buenos Aires.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Argentina’s President Javier Milei addresses Congress as he presents the 2025 budget in Buenos Aires, Argentina, Sunday, Sept. 15, 2024.
| Photo Credit: AP

Libertarian President Javier Milei of Argentina presented the 2025 budget to Congress late Sunday, outlining policy priorities that reflected his key pledge to kill the country’s chronic fiscal deficit and signaled a new phase of confrontation with lawmakers.

In an unprecedented move, Mr. Milei personally pitched the budget to Congress instead of his Economy Minister, lambasting Argentina’s history of macroeconomic mismanagement and promising to veto anything that compromised his tough slog of tight fiscal policy.

The President’s budget proposal followed a week of political clashes in the legislature — where Mr. Milei controls less than 15% of the seats — over spending increases that the administration warns would derail its IMF-backed “zero deficit” budget. Opposition parties have sought to pass laws to raise salaries and pensions with inflation to help hard-hit Argentines cope with brutal austerity.

“The cornerstone of this budget is the first truth of macroeconomics, a truth that for many years has been neglected in Argentina: that of zero deficit,” Mr. Milei told lawmakers, facing a handful of empty seats as most of the hard-line opposition Peronist bloc, Unión por la Patria, skipped his address. “Managing means cleaning up the balance sheet, deactivating the debt bomb that we inherited.”

Milei’s supporters interrupted his speech—packed with his usual libertarian talking points—with whoops and cheers.

It will fall to the opposition-dominated Congress, which controls the government’s purse strings, to approve the final budget. Mr. Milei’s political isolation makes matters fraught, setting up weeks of negotiations with political rivals who insist on concessions.

But Mr. Milei vowed that nothing would stop him from pressing on with austerity.

Matter of principles

“The budget is a declaration of principles,” said Argentine economist Agustín Almada. “Even if there is no compromise from the opposition, Mr. Milei will continue pursuing this fiscal contraction.” If the stroke of a veto pen failed to prevent powerful lawmakers from spending, Mr. Milei promised to find other ways to cut down the state.

“We will only discuss the increase in spending when it comes along with an explanation of what we’ll cut to compensate for it,” Mr. Milei said.

Over Mr. Milei’s past nine months in office, dramatic cuts to public spending—which he says are necessary to restore market confidence in a country ravaged by one of the world’s highest annual inflation rates—have racked up a fiscal surplus (0.4% of gross domestic product), something unseen in nearly two decades.

The austerity has also caused deep economic pain in Argentina, with nearly 60% of Argentines now living in poverty, up from 44% in December, according to the Catholic University. Mr. Milei has largely balanced the budget by slashing financial transfers to provinces, removing energy and transport subsidies and holding wages and pensions steady despite inflation.

Mr. Milei warned that his fiscal shock therapy was not going to be easy. But his administration is betting the worst has passed. Although annual inflation hovers around 237%, Mr. Milei has retained popular support by working to keep a lid on monthly inflation, which has dropped to 4% since its peak of 26% last December when he took office.

In an optimistic statement about the budget Sunday, the Finance Ministry said it expected Mr. Milei’s proposal to result in an annual inflation rate of just 18% by the end of 2025 and yield a 5% economic growth rate. Argentina’s economy contracted by more than 3% in the first half of 2024.

But much of Mr. Milei’s future depends on Congress.

Argentines taking to the streets to revel in their Copa América triumph inhabit a very different place now than they did 19 months ago, when their World Cup win sent millions surging into the same Buenos Aires square in a howl of collective celebration.

“Glorious,” Diego Cáceres, 38, recalled of Argentina’s massive open-air party on December 18, 2022.

“This is beautiful, too,” he said of Sunday’s crowds cheering and setting off fireworks around the capital’s landmark obelisk after Argentina beat Colombia 1-0 in extra time to win its third straight major tournament Sunday night.

“But it’s a cherry-on-top, or a reminder. It makes me want to go back in time.”

Poverty stricken

Economic crisis has stalked Argentina for years. But today, annual inflation tops 270%. Almost 60% of the country’s 45 million people live in poverty.

Argentines have become worn out by the high-stakes anxiety of the news: Anti-government protests raging, labor strikes paralyzing cities, President Javier Milei, a self-described “anarcho-capitalist,” unveiling new spending cuts. This week their televisions flashed dire warnings about the peso hitting new lows against the dollar, dragging the value of their savings down with it.

The last time Cáceres celebrated his national team in this downtown square, he worked as a cook in various restaurants and rented an apartment. Today, he said, he’s unemployed and sleeps on the streets.

“Everything is horrible now,” he said after the game finally got underway in Miami after repeated delays due to fan congestion.

“Just when you think things can’t get more expensive, they do.”

Crisis after triumph

Some in this superstitious nation joke that they paid a steep price in Qatar for their first World Cup victory since 1986, pointing to the crises that followed the triumph.

“Has anyone checked the terms and conditions of winning the Copa América?” reads one post on X widely shared among Argentines. “I don’t know if I’m up for a second round of winning at any cost.”

But Argentines say that they needed this tournament, and this trophy, more than they could have imagined. For Argentina, South America’s biggest football championship offered not just glorious achievement but exquisite, if fleeting, escape.

“It’s our best entertainment, that’s what makes it so important,” said Erika Maya, a 47-year-old homeless mother of six, as she peered at the televised match through the glass of a locked restaurant door. “You can forget everything that’s going on, and just enjoy.”

Messi-inspired respite

For every new outrage over the last 24 days, Argentines have found the respite of obsessively watching their beloved national team, led by Lionel Messi, play for an hour and a half, generating moments of agony and excitement that reverberate all over this football-crazed country.

“Football is the fruit of our society, it’s what we’re proud of, it’s what we give to the world,” said 21-year-old soldier Fabrizo Diaz, who watched the match with his girlfriend.

As the game kicked off at Miami’s Hard Rock Stadium, restaurants in Buenos Aires shuttered, streets emptied and the sprawling city fell eerily silent, with most Argentines in thrall to their TVs at home as though under a COVID lockdown. The looming specter of Messi’s retirement has heightened football fever in recent weeks, with the 37-year-old captain’s noncommittal muses in televised interviews inducing, at turns, nationwide hope and despair.

“I believe Messi is going to continue. I don’t know if he’ll make it to the next World Cup, but this is not the end,” said 32-year-old Adrian Vallejos, watching the final with his wife and son. “I mean, God, I hope so.”

Messi’s persistent leg injuries — including a hurt ankle in the second-half of the final that forced him off the field — have drawn more attention than his performances during this Copa América. But Argentines breathed a sigh of relief when, asked by ESPN this week whether this match would be his last in blue-and-white, Messi refused to rule out playing in the 2026 World Cup.

“We’re at a very poignant transition for this team,” said Alejo Levoratti, a sports sociologist at Argentine research institute CONICET. “It’s only at the point of his retirement that Messi arrived at his best moment and found this connection with his team, this communion with Argentina.”

Another Argentine great of the same age, Ángel Di María, had announced Sunday’s match would be his last, fueling a broader sense of nostalgia about the national squad. He had tears in his eyes as he left the pitch to a standing ovation after Argentina’s breakthrough goal. “I dreamt of retiring like this,” he told reporters afterward.

Successful run

After years of disappointments in international tournaments, the Argentine team has, more recently, clinched triumph after triumph — 2021 Copa América, 2022 inaugural Finalissima match, 2022 World Cup — exhilarating its troubled country again and again.

President Milei, who had a short stint as a goalie for the professional football team Chacarita Juniors, congratulated the national team in an all-caps message on X: “WE ARE CHAMPIONS AGAIN…!!!”

In litter-strewn downtown Buenos Aires, the site of so many protests in recent weeks, national pride appeared, briefly, restored. Friends and strangers draped in Argentinean flags and jerseys hugged and jumped up and down, some singing “Muchachos,” the unofficial anthem of the 2022 World Cup, others chanting Messi’s name.

The fall in activity in March follows year-on-year declines of 3.0% in February and 4.1% in January. File
| Photo Credit: AP

Argentina’s economic activity fell 8.4% in March from a year earlier, the country’s official statistics agency said on May 22, its fifth monthly drop in a row and the steepest fall since 2020.

The result was a steeper drop than the 6.9% fall estimated by market analysts in a Reuters poll, underscoring the impact of libertarian President Javier Milei’s cost-cutting policies since taking office in December. Mr. Milei has embarked on a painful austerity drive to bring down rising poverty and annual inflation near 300%.

Nine sectors recorded declines in the year-on-year comparison, led by construction that posted a 29.9% decline and the manufacturing industry which slipped 19.6%, according to the data published by Argentina’s INDEC statistics agency.

Economic activity numbers are seen as a useful early indicator of likely gross domestic product (GDP) results.

The fall in activity in March follows year-on-year declines of 3.0% in February and 4.1% in January.

In the year through March, Argentina’s economic activity fell 5.3%.

President of Argentina, Javier Milei. File

Argentina’s monthly inflation rate eased sharply to a single-digit rate in April for the first time in half a year, data released Tuesday showed, a closely watched indicator that bolsters President Javier Milei’s severe austerity program aimed at fixing the country’s troubled economy.

Prices rose at a rate of 8.8% last month, the Argentine government statistics agency reported, down from a monthly rate of 11% in March and well below a peak of 25% last December, when Mr. Milei became president with a mission to combat Argentina’s dizzying inflation, among the highest in the world.

“Inflation is being pulverized,” Manuel Adorni, the presidential spokesperson, posted on social media platform X after the announcement. “Its death certificate is being signed.”

Also Read: What is the outlook on the global economy? | Explained 

Although praised by the International Monetary Fund and cheered by market watchers, Mr. Milei’s cost-cutting and deregulation campaign has, at least in the short term, squeezed families whose money has plummeted in value while the cost of nearly everything has skyrocketed. Annual inflation, the statistics agency reported Tuesday, climbed slightly to 289.4%.

“People are in pain,” said 23-year-old Augustin Perez, a supermarket worker in the suburbs of Buenos Aires who said his rent had soared by 90% since Mr. Milei deregulated the real estate market and his electricity bill had nearly tripled since the government slashed subsidies. “They say things are getting better, but how? I don’t understand.”

Mr. Milei’s social media feed in recent weeks has become a stream of good economic news: Argentine bonds posting some of the best gains among emerging markets, officials celebrating its first quarterly surplus since 2008 and the IMF announcing Monday it would release another $800 million loan—a symbolic vote of confidence in Mr. Milei’s overhaul.

“The important thing is to score goals now,” Mr. Milei said at an event Tuesday honoring former President Carlos Menem, a divisive figure whose success driving hyperinflation down to single digits through free-market policies Mr. Milei repeatedly references. “We are beating inflation.”

Shrinking economy

Even so, some experts warn that falling inflation isn’t necessarily an economic victory—rather the symptom of a painful recession. The IMF expects Argentina’s gross domestic product to shrink by 2.8% this year.

“You’ve had a massive collapse in private spending, which explains why consumption has dropped dramatically and why inflation is also falling,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics who studies emerging markets. “People are worse off than they were before. That leads them to spend less.”

Signs of an economic slowdown are everywhere in Buenos Aires—the lines snaking outside discounted groceries, the empty seats in the city’s typically booming restaurants, the growing strikes and protests.

At an open-air market in the capital’s Liniers neighborhood, Lidia Pacheco makes a beeline for the garbage dump. Several times a week, the 45-year-old mother of four rummages through the pungent pile to salvage the tomatoes with the least mold.

“This place saves me,” Pacheco said. Sky-high prices have forced her to stick to worn-out clothes and shoes and change her diet to the point of giving up yerba mate, Argentina’s ubiquitous national drink. “Whatever I earn from selling clothes goes to eating,” she said.

Mr. Milei, a self-proclaimed “anarcho-capitalist” and former TV personality, warned his policies would hurt at first.

“It’s not his fault, it’s the Peronists who ruined the country, and Mr. Milei is trying to do his best,” said Rainer Silva, a Venezuelan taxi driver who fled his own country’s economic collapse for Argentina five years ago.

Argentina’s President Javier Milei speaks during the opening session of the 142nd legislative term, at the National Congress, in Buenos Aires, Argentina, March 1, 2024.
| Photo Credit: REUTERS

Argentina’s libertarian President Javier Milei, in his first policy speech to parliament on Friday, said he would push his package of sweeping economic reforms whether or not legislators back it.

“We are going to change the country for good… with or without the support of political leaders, with all the legal resources of the executive,” Mr. Milei told lawmakers, who have stalled his project of deregulation and budget cuts.

“If you look for conflict, you will have conflict,” he told them.

Mr. Milei offered a recap of his first 82 days in office, in which he devalued the peso more than 50%, slashed state subsidies for fuel and transport, cut tens of thousands of public service jobs, and scrapped hundreds of rules in his bid to deregulate the economy.

“I ask for patience and trust,” Mr. Milei said. “It will be some time before we can perceive the fruit of the economic reorganization and the reforms we are implementing.”

Many of his planned reforms face challenges in court, with more than 60 lawsuits under way by labor unions, business chambers and NGOs, while Argentina has seen massive protests by citizens who fear Milei’s plans will leave them poorer.

“We have not yet seen all the effects of the disaster we inherited, but we are convinced that we are on the right path, because for the first time in history we are attacking the problem by its cause: the fiscal deficit, and not by its symptoms,” Mr. Milei said.

In recent weeks, Mr. Milei has reached out to influential provincial governors, party leaders and former Presidents to forge a “new social contract” for the country, based on ten principles, including a “non-negotiable” balanced budget, “inviolable” private property, and public spending reduced to the “historic” level of 25% of GDP.

Decades of mismanagement

Faced with parliamentary reticence, Milei scrapped almost half of the initial 664 articles in the sweeping deregulatory measure issued after he took office, then withdrew it altogether.

But the president has vowed to return his Bill to parliament. And he has threatened to pass his reforms by Presidential decree if lawmakers do not fall in line.

Argentina is grappling with severe economic struggles after decades of mismanagement that has driven poverty levels to nearly 60% and pushed inflation to an annual rate over 200%.

Mr. Milei, a 53-year-old political outsider, won a resounding election victory last year on a wave of fury over a financial crisis marked by rampant money printing and fiscal deficit.

The government claims some of Mr. Milei’s changes are already bearing fruit: In January, Argentina reported its first monthly budget surplus in 12 years while boosting foreign currency reserves from $21 billion to $27 billion.

But as annual inflation continued to bite, the poor were hit hard as Mr. Milei also ripped away generous transport and energy subsidies and froze aid to 38,000 soup kitchens pending an audit.

Mr. Milei insists Argentina has to swallow a bitter pill to rescue the economy, and has warned the population to brace themselves for things getting worse before they get better.

Argentina’s President Javier Milei
| Photo Credit: Reuters

The government of Argentine President Javier Milei was seeking to salvage his wide-ranging economic reform package after Congress delivered a major blow a day earlier, casting doubt over its future and triggering a fall in financial markets.

Lower house lawmakers rejected several crucial proposals in the bill, sending it back to committee and back to the drawing board.

Also Read | Argentina lawmakers approve Milei’s ‘omnibus’ reform bill; protests continue on streets

The government said it was seeking ways to keep the bill alive.

“All constitutional tools are being evaluated,” presidential spokesman Manuel Adorni said at a news conference on Wednesday. “At some point the law is going to become a reality.”

Mr. Milei’s so-called “omnibus” bill, which had already been significantly reworked by lawmakers before Tuesday’s defeat, included provisions to allow for the privatization of state entities and give the president greater powers, among changes to hundreds of regulations.

The government was now weighing whether to break it up into separate bills, ruling party lawmaker Oscar Zago said in an interview on local radio station Urbana.

Mr. Zago, who leads the ruling party’s minority bloc in the lower house, said a non-binding national referendum could also be held to drum up support for the bill.

Mr. Milei, who has accused opposition lawmakers of “betrayal” for voting against some of the key proposals, argues reforms are needed to rescue Argentina from its worst economic crisis in decades, with inflation running at over 200%.

Argentina’s stock market fell more than 5% on Wednesday. Bonds slid an average 1%, and the peso currency weakened more than 3%.