Argentina's Inflation Rate Continues To Decline Under Milei's Austerity Policies

Argentina's inflation showed a decrease for the second consecutive month in February as President Javier Milei continued to push austerity measures and deregulation policies to boost the country's ailing economy.

According to the numbers issued by the government's INDEC statistics agency Tuesday, Argentina's monthly inflation dropped to 13.2% in February, compared to 20.6% in January. Whereas, the inflation was 25.5% in December, AP News reported.

Despite the slowdown, the annual inflation in February marked the highest in three decades, surpassing 276.2%. Milei's government noted that the inflation rate last month was a result of "strong fiscal discipline."

Government officials and analysts predict a rise in prices in March due to increases in electricity costs, fuel prices, private education, medical services, and other contributing factors.

After Milei took over the office in December, he upset many provincial leaders due to the economic changes he brought into the system. Just two days after taking over the office, he announced a devaluation of the local currency, the peso, and cuts to energy and transportation subsidies, as part of measures to revive a crumbling economy.

He also suspended many public works and reduced the amount of funds provided to the provincial governments.

This week, Argentina initiated a significant voluntary debt exchange for peso and certain dollar-linked instruments maturing in 2024 to postpone repayments in light of the country's severe economic crisis.

Despite being known for its grain production, Argentina is grappling with challenges such as inflation exceeding 250%, a poverty rate near 60%, dwindling foreign currency reserves in the central bank, and numerous currency controls aimed at stabilizing the weakening peso, according to a report.

Argentina, which is tackling triple-digit inflation, owes the International Monetary Fund (IMF) $45 billion and also has a trade deficit of $43 billion.