Argentina's Inflation Slows in Q1 2024, But Challenges Remain

Argentina's economy saw a visible deceleration of inflation in the first quarter of 2024, according to recent reports. While the monthly inflation target of 2% set by Economy Minister Luis Caputo has not yet been reached, the accumulated inflation for the quarter is expected to be around 7.3%. This is a decrease compared to the 8% in the last quarter of 2024, and a significant improvement from the 51% accumulated in the first three months of the previous year. Despite the overall positive trend, there was an interruption in the deceleration. Inflation rose to 2.4% in February, accumulating an increase of 66.9% year-on-year. The largest impact in February was in Food and Non-Alcoholic Beverages (3.2%), mainly due to the increase in meat and its derivatives. However, the category with the highest increase was Housing, water, electricity, gas and other fuels (3.7%), due to increases in rents and gas and electricity rates. Looking ahead, the Central Bank's Market Expectation Survey (REM) projects inflation of 1.9% for April, with a continuous decrease to 1.5% in August. However, for the first time under the current government, the REM shows higher inflation projections for the coming months. The future trajectory of inflation will depend on the ongoing agreement with the International Monetary Fund and the exchange rate scheme adopted.