The economic indicator that's sparking euphoria in Argentina: inflation could already be below 2%.

Javier Milei's arrival to the Argentine government was driven by a promise that seemed difficult to keep: to sharply reduce inflation and stabilize the country's economy. This was the first phase of a long-term plan that is gradually achieving some of its goals. The CPI has moderated sharply in the country, falling from over 25% monthly at the end of 2023 to the current 2.8%. However, data published just a few hours ago suggests that Argentina's CPI could be about to break through that magic number of 2% monthly, which would once and for all dispel fears of a rebound in inflation and demonstrate that Javier Milei's policies (austerity, deregulation, and investment incentives) are fulfilling their purpose, even after lifting the exchange rate controls , which was one of the riskiest decisions in this regard.

The relationship between inflation in the city of Buenos Aires and that of Argentina is usually quite strong, so analysts closely monitor these data, which are usually released shortly before the general inflation rate, to place their bets. Well, inflation in the City of Buenos Aires was 1.6% in May and has accumulated 12.9% in the first five months of the year. This was confirmed this Monday by the Buenos Aires Institute of Statistics and Census (IDECBA), in the run-up to the national data to be released this Thursday by INDEC. This figure, considered a key leading indicator of the national Consumer Price Index (CPI), represents good news for the government: it represents a sharp drop of 0.7 points compared to the 2.3% recorded in April.

Nationally, the CPI stands at 2.8%, but a sharp moderation is now expected following the data released in Buenos Aires. The OECD itself admitted a few days ago in its global forecasts that inflation tends to be a common problem in Latin America, with certain exceptions: "Inflation remains above target in many countries. In contrast, Argentina has made significant progress thanks to a combination of fiscal consolidation and more restrictive monetary policy," the published document stated. This week may confirm that inflation has definitively taken a trend that promises to return it to normal.

Furthermore, the monthly figure is the lowest since June 2020, when the Buenos Aires price index reached 1.4%. In year-on-year terms, the change reached 48.3%, or 4.1 points below the April figure. This figure is particularly significant as this is the first full month without exchange controls on the official market, which demonstrates a slight pass-through to prices following the rise in the official dollar in mid-April, when the official exchange rate adjusted by almost 10%.

Thus, the lifting of the exchange rate controls appears to have been a genuine success, despite the initial fears. Some analysts had predicted a massive outflow from the peso to the dollar (lifting the exchange rate controls allows for this), which would depreciate the Argentine peso and reignite inflation. For now, there are no signs of this trend, and the CPI continues to moderate.

At the national level, although the component weighting used by INDEC and IDECBA is not identical, the main private consulting firms also project a May CPI below 2%, according to experts consulted by the Argentine press and Yahoo Finance .

In the City of Buenos Aires, May inflation showed sharp contrasts across sectors, with increases of up to 3.8% and deflations of as low as -0.1%. Measurements by product type reflect this dispersion: while services rose 2%—0.4 points above the overall level—goods increased by just 0.8%, or half the monthly CPI. On the other hand, seasonal prices fell 3.6% compared to April, primarily due to falls in airfare, hotel rates, and prices for vegetables and tourist packages, according to IDECBA.

In April, inflation in Buenos Aires had also been 1.6%, but more significant increases were seen in certain sectors. The largest increases were seen in "Information and Communication" (3.8%), "Insurance and Financial Services" (3.7%), and "Health," which rose 2.9% due to the increase in prepaid medical premiums.

In contrast, the "Transportation" component fell 0.1%, "Home Equipment and Maintenance" registered no changes, and "Alcoholic Beverages and Tobacco" barely increased 0.2%, the only items that did not exceed 1%. "During May, the variation in the CPIBA was primarily due to increases in the "Housing, Water, Electricity, Gas, and Other Fuels," "Health," "Information and Communications," "Food and Non-alcoholic Beverages," and "Education" divisions, which together accounted for 1.23 percentage points of the overall increase," the IDECBA report highlights.

In particular, the "Food and Beverage" component, which has the greatest impact on people's wallets, rose 1.2% in May, 0.4 points below the overall CPI. So far in 2025, this sector has accumulated a 13.1% increase, above the overall average of 12.9%. However, year-on-year, its increase was less than the overall index: 34.6% compared to 48.3%. While we await the final overall inflation data in Argentina , for now, everything seems to be euphoria and hope, which should be confirmed later.