As Argentina inflation dips, locals dare to hope the worst is over
2024.12.11 11:17
By Horacio Fernando Soria and Miguel Lo Bianco
BUENOS AIRES (Reuters) – As Argentina’s soaring inflation rate slowly returns to earth, locals are starting to believe the worst of a biting economic crisis is over and hoping that slowing price rises will lead to a recovery of growth and stalled activity.
The South American nation, facing a tough austerity drive by libertarian President Javier Milei, is expected to see November inflation come in around 2.8%, little changed from October but a big drop from 25% at the end of last year.
The economy, mired in recession, has taken longer to reactivate, but some Argentines are seeing the light at the end of the tunnel.
“My sense is that we’ve already passed the worst. It seems to me the economy hit bottom two months ago,” said textile merchant Aram Boyaciyan, adding middle and working-class clients with steady jobs appeared to be “recovering purchasing power”.
“Six months ago, we didn’t knew where we were heading, but now we do, and everyone has to adapt to these rules,” he said.
Argentina, emerging from a period of major economic crisis and still grappling with rock-bottom foreign currency reserves, capital controls, and 50% poverty, has seen inflation come down as Milei has squeezed state spending to overturn a deep deficit.
Rolling 12-month inflation is just under 200% – still sky-high – but has dropped since a peak nearer 300% in April and is expected to end the year closer to 100%.
That’s still squeezing many consumers, especially in the public sector where Milei’s spending cuts have been the hardest.
“I don’t know much about inflation, but I know that when I get my salary, it’s gone in a couple of days,” teacher Aida Segot told Reuters. “Each month it used to run out on the 20th; now it runs out on the 12th.”
However, after a year in office, political outsider Milei’s support remains robust, with many Argentines even angrier at the mainstream politicians he replaced after years of rising prices and economic distortions in the farm-driven economy.
Many are willing to give Milei time, especially given his relative success on inflation.
“I think it’s important to understand that this is the path. And while some are struggling, as long as we stay on this path it will be okay,” said Buenos Aires merchant Dolores Sagasta.
“We need to give him more time; it’s only been a year, and we need to give him more time.”
