Argentina’s National Institute of Statistics and Census (INDEC) reported a significant reduction in the country’s inflation rate for September, announcing a rate of 3.5 percent. This marks the lowest inflation level seen in Argentina since November 2021 and reflects the effectiveness of President Javier Milei’s “shock therapy” economic measures. Since taking office in December 2023, Milei’s administration has successfully reduced inflation from a staggering 25.5 percent, suggesting a shift in economic policies aimed at addressing the long-standing crisis that Argentina has faced, particularly during the previous administration led by socialist President Alberto Fernández.
Under Fernández’s leadership, which spanned from 2019 to 2023, Argentina’s economic landscape deteriorated significantly, with inflation soaring to 12.7 percent by September 2023. Fernández’s administration culminated in a staggering total inflation rate of 1,020 percent over its four-year term, leading the country to the brink of economic collapse. The policies implemented by Milei aim to rectify these economic challenges, reversing the trend of rampant inflation that had sown distrust in the economy under leftist governance. The decline in the inflation rate under Milei’s regime represents a crucial development for the nation, providing hope for stability and recovery.
Notably, September’s inflation record is a milestone as it is the first time that inflation has dropped below four percent under Milei’s administration, coming down from August’s 4.2 percent. Core inflation, which excludes regulated and seasonal prices, was reported at 3.3 percent. The detailed breakdown from INDEC illustrated that housing-related costs saw the most significant hike, with a 7.3 percent increase, followed by clothing and footwear at six percent, likely influenced by seasonal changes as spring began in late September. Conversely, sectors like food and alcoholic beverages experienced modest inflation levels, illustrating an uneven impact of Milei’s policies across different areas of the economy.
Celebrations erupted within Milei’s government following the release of INDEC’s report, with Milei himself taking to social media to highlight the historic reductions in inflation. He emphasized the methodology behind the declines, asserting that the success was achieved without resorting to expropriation, stringent price controls, or manipulating exchange rates. Such an approach is presented as a novel strategy that underscores fiscal responsibility and a commitment to structural reforms, marking a departure from the policies of previous administrations. Milei’s use of graphical representations to illustrate changes emphasizes the narrative of success he aims to propagate about his governance.
Economy Minister Luis Caputo echoed Milei’s sentiments by pointing out that the 3.5 percent inflation in September represents significant progress, continuing the trend of deflation and adherence to fiscal and monetary discipline. Caputo underscored the importance of maintaining a balanced budget in realizing lower consumer prices, consolidating the government’s commitment to economic orthodoxy. Meanwhile, Security Minister Patricia Bullrich expanded on this notion, arguing that the reduction in inflation is a collective benefit for all Argentines, emphasizing the necessity of responsible economic policies for the welfare of the nation at large.
Milei’s unyielding stance on achieving a “zero deficit” fiscal policy underscores his commitment to long-term financial stability. His recent veto of a university financing bill, deemed irresponsible and a threat to fiscal balance, reiterates this commitment. The Argentine Congress upheld this veto, further signaling Milei’s determination to maintain fiscal discipline. As a consequence of these policies, Argentina recorded its first GDP surplus since 2008, a noteworthy achievement considering the 15 percent GDP deficit it faced upon Milei’s entry into office. Through a combination of aggressive economic reform and strict fiscal management, Milei’s government aims to pave the way for sustainable growth and recovery from the extensive crises stemming from years of unstable governance.
