Argentina's May inflation at 2.1%, below market expectations

Argentina's inflation continued its downward trend in May, registering 2.1%. This figure fell below market expectations and marks the second consecutive month of deceleration since the March peak. While the monthly rate remains above 2%, the annual inflation rate climbed to 33.2%. Core inflation, however, showed a significant drop to 1.9%, down from 2.3% in April. This economic news offers a glimmer of hope amidst a volatile economic landscape and political turmoil surrounding the Chief of Staff. The market, surveyed by Relevamiento de Expectativas del Mercado (REM), had predicted a 2.3% inflation rate for May. Looking ahead, REM anticipates inflation to continue its descent, reaching 2.1% in June and potentially dropping below 2% in August. The annual forecast for the year is 30.5%, slightly lower than 2025's projection but still far from the economic team's budget law target of 10.1%. The previous administration ended its term in 2023 with an inflation rate of 211.4%. The International Monetary Fund (IMF) has noted that Argentina's official inflation methodology is outdated and less representative of current consumption patterns, urging for a new regulatory framework for the national statistics agency. The current inflation slowdown is supported by macroeconomic stability and government decisions to manage costs, such as containing liquefied natural gas import expenses and moderating fuel price increases.