Disinflation in Argentina is on Track; IPC Expected to Break 2% in August

Argentina's disinflation process, which resumed in April after a pause since July last year, is showing healthy progress, according to local market analysts. They anticipate this trend will continue in the coming months, leading to a significant drop in inflation.

Analysts estimate the Consumer Price Index (IPC) closed May at 2.3%, a decrease from April's 2.6%. Projections indicate a continued decline, with the IPC expected to fall between 2.2% and 2.1% before breaking the 2% threshold in August. By October and November, inflation is predicted to reach between 1.7% and 1.8%.

While these forecasts are still short of President Javier Milei's goal of near-zero inflation by August 2026, they represent the first downward revisions from economists who have demonstrated greater accuracy in predicting monthly price changes. This group, previously projecting higher inflation rates for June, July, and August, has now adjusted its estimates downward. Consequently, the forecast for accumulated inflation in 2026 has stabilized at 30.5%.

The projections, gathered from the Central Bank's (BCRA) monthly Market Expectations Survey (REM), assume a relatively stable dollar and annualized quarterly economic growth between 2.8% and 2.9%. However, the consumption and labor markets are expected to remain weak. The median forecast for the nominal exchange rate is $1658 per dollar, indicating an expected annual increase of 14.5%, which remains below the prevailing indexation rate in various economic sectors.