Javier Milei Slashes Argentina's Inflation in Just 1 Year

Austerity measures and bold economic reforms led to the country's lowest inflation rate in over four years.

Argentina's annual inflation rate fell to 117.8 percent in 2024, marking a significant drop of 93.6 points compared to the record 211.4 percent inflation rate of 2023. The sharp decline signals a significant turnaround for Argentina's economy under President Javier Milei.

In December 2024, inflation stood at 2.7 percent, Argentina's National Institute of Statistics and Census (INDEC) claimed in a new report. While slightly higher than the record low of 2.4 percent in November, Economy Minister Luis Caputo attributed the uptick to "seasonal factors" tied to the holiday season and the start of summer vacations.

Despite the minor increase, December marked the third consecutive month in which prices rose by less than 3 percent. The data "confirms the disinflation process is continuing," Caputo posted on X following the report's release. 

Milei's tenure began amid severe economic turmoil in Argentina. His government swiftly implemented an ambitious austerity program that included slashing federal spending, deregulating the economy, and devaluing the peso by 50 percent. The measures aimed to help stabilize Argentina's spiraling inflation. 

In Milei's first month in office, annual inflation surged to 254.2 percent and peaked near 300 percent in May 2024. But by November 2024, inflation had plummeted to its lowest level in over four years.

"In just 12 months we pulverized inflation," Argentina's Economy Ministry posted on X. "The inflation data throughout the first year of administration reflect a promise fulfilled, a sensible economic plan and the basis for Argentina to grow steadily."

The positive inflation trajectory has prompted Argentina's central bank to adjust its monetary policy. An hour after INDEC's report was released, the Central Bank of the Argentine Republic (BCRA) announced a slowdown in the peso's controlled devaluation rate, known as the crawling peg. 

Beginning in February, the devaluation rate will be reduced from 2 percent per month—in place since December 2023—to 1 percent per month. 

"In consideration of the consolidation observed in the inflationary trajectory during the last months, and in the expectations of lower inflation, the Central Bank of the Argentine Republic (BCRA) establishes a new displacement path of 1% per month for the exchange rate, starting on February 1, 2025,″ the BCRA explained in a statement.