THE USHUAIA TIMES

Argentina's national statistics agency, INDEC, reported Thursday that consumer prices rose 1.7% in August, a sharper deceleration than most private economists had penciled in and the slowest monthly reading in 14 months. The figure marks the lowest August inflation print in the country since 2017, extending a disinflation trend that has become the central pillar of President Milei's economic narrative.

The August number was down from 2.1% in July. Core inflation, the measure that strips out regulated prices and seasonal goods and is generally viewed as a cleaner read on underlying price pressure, came in at 1.8%. On a cumulative basis, prices are now up 21.3% for the year to date and 33.5% over the trailing twelve months, a reminder that even a sustained run of sub-2% monthly readings still leaves Argentina with one of the highest inflation rates in the world.

The breakdown showed housing, water, electricity and gas costs rising fastest, at 2.8%, followed by education at 2.5% as the increase filtered through from the start of the school year in some provinces, and regulated prices generally at 2.2%. Food and beverages, which carry the heaviest weight in the basket and hit lower-income households hardest, rose broadly across regions on higher prices for vegetables, legumes, fruit and bread. On the other side of the ledger, clothing and footwear fell 0.6% and seasonal items dropped 0.9%, while recreation and culture were essentially flat.

The result matched what private consultancies had been forecasting in the days before the release, with estimates clustered between 1.6% and 1.7%. That precision matters politically: a downside surprise would have undercut the government's disinflation story, while an upside miss would have raised fresh doubts about the durability of the trend heading into the final stretch of the year.

The government did not downplay the moment. Caputo said the reading was "the lowest increase since June of last year, and the slowest pace for an August since 2017," framing it as validation of the fiscal and monetary tightening that has defined his tenure at the economy ministry. Milei reacted with a one-line message to his economy minister: "Vaaamos, Toto!" The post was quickly picked up and amplified across government-aligned accounts. Deregulation Minister Federico Sturzenegger struck a more measured tone, saying that "it will take a month more, a month less, but if the economic policies are those of a normal country, inflation is going to become a normal country's inflation."

The data landed in the same week Argentina's Treasury moved to roll over roughly $8.1 trillion pesos in short-term debt and the country's bonds held firm even as a broader global selloff hit sovereign debt markets elsewhere, with the country-risk spread steady near 491 basis points. Taken together, the government is presenting a picture of a program that is holding under pressure: falling inflation, stable bonds and a peso that has weakened only modestly against the dollar.

Independent of the headline number, the deceleration in official inflation has not translated evenly into relief at the household level. A shelved inflation index that Argentina's own statistics agency stopped publishing years ago has separately shown wages losing purchasing power roughly twice as fast as the official CPI implies, underscoring that a slower pace of price increases is not the same thing as prices, or the cost of living, actually falling.

Private forecasters see September inflation holding below 2% as well, though consultancies including Aldazabal y Cia caution that breaking decisively below 1.5% on a sustained basis remains a harder threshold to clear, given how much of the recent deceleration has depended on a relatively calm exchange rate and administered prices that the government can only hold down for so long. For a government whose central economic claim is that markets and household budgets are stabilizing together, the next two or three inflation readings will do more than any speech to determine whether August was a turning point or a favorable month inside a longer, bumpier disinflation.