After the sharp drop in inflation in the last quarter of 2024, it is expected that the inflation in Argentina begins 2025 with a significant slowdown. According to the National Institute of Statistics and Censuses (INDEC), the Consumer Price Index (CPI) for December 2024 was 2.7%, which represents a notable decrease compared to the 211% annual rate recorded in 2023.
Private analysts and financial entities, such as JP Morgan, project that the inflation monthly interest rate will remain close to 2% during the first quarter of 2025. The reduction of the monthly moving interest rate to 1% from February 2025 is one of the key factors contributing to the slowdown in inflation.
This measure seeks to control aggregate demand and reduce inflationary pressure. The Government has implemented orthodox fiscal policies, including deregulations and adjustments in public spending, which have contributed to the stabilization of prices.. The reduction of the fiscal deficit and the commitment to a primary fiscal surplus have also been important factors.
The moderation in the pace of devaluation of the official dollar has allowed greater stability in prices. The reduction in exchange rate volatility has helped control import costs and keep inflation under control.
The seasonality of prices, especially during the end-of-year holidays and the beginning of summer, has influenced the behavior of prices. However, core inflation has shown a slowing trend.
Wage negotiations have had an impact on inflation, although in some cases wage increases have exceeded price increases. This has generated a balance between the purchasing power of workers and inflation.
Consumption
The recovery in consumption and aggregate demand also play an important role in inflation. Although consumption has increased in key sectors, it has not been enough to generate a significant rebound in prices.
According to the Central Bank’s Market Expectations Survey (REM), inflation in January 2025 is expected to be 2.5%, with a slowdown projected for the following months. Analysts project a inflation 25% annual growth by the end of the year, which represents a significant improvement compared to 2024.
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