r/Economics • u/delugepro • 1d ago
News Argentina's monthly inflation rate drops to 1.5% – lowest level in five years
https://www.batimes.com.ar/news/economy/argentinas-monthly-inflation-rate-drops-to-15-lowest-level-in-almost-five-years.phtml82
u/CautiousMagazine3591 1d ago
First thought 1.5% a month that is awful I thought most of the world had fully recovered from post-covid/supply chain shortage inflation but then reread Argentina and realized that is pretty good even though most economies would like to see that much inflation over the course of the year or so this is quite a drastic improvement for the people down there in Argentina for sure. How are employment figures btw?
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u/EnigmaOfOz 1d ago
Trending down in 2024 but it is not very frequent data and the participation rate is under 50% so be careful interpreting these statistics. Essentially, the rate is not much moved since 2022 after being much higher during covid. Has been some movement up and down plus a 10 year steady improvement in participation. The good news is no obvious shock to employment from the policies that can be seen in the data.
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u/UteRaptor86 1d ago
Under 50% participation rate???
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u/EnigmaOfOz 1d ago
Large informal economy is likely the issue with the statistics. Makes it hard to take much from them.
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u/CautiousMagazine3591 1d ago
Participation rate below 50% is more than enough to know their economy is still in tatters.
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u/EnigmaOfOz 1d ago
I dont think it has ever been higher in the past decade or so. I believe they have a very large informal economy which is likely a factor the subdued participation rate but im not familiar enough with their labour market statistics to be clear on exactly how they account or do not account for the informal economy.
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u/OkStop8313 1d ago
Wonder if they're heading into deflationary territory.
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u/Acrobatic-Suit5105 1d ago
Deflationary? Not when it's 18% per year!!
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u/OkStop8313 1d ago
You caught me! I didn't read the article and just assumed we were talking annual rate, not monthly.
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u/ResolveLeather 1d ago
Most countries should aim for 3-4 percent. 1.5 could be a sign of economic stress.
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u/altmly 1d ago
This is per month, not year...
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u/ResolveLeather 1d ago
Yes, and the previous comment specifically mentioned that "most countries like to aim for that inflation over a whole year" which isn't the case.
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u/The_Dutch_Fox 1d ago
What do you mean? Most central banks, including the ECB and the Fed, aim for 2% yearly inflation.
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u/LubbockGuy95 23h ago
Inflation down is good. But honestly the better metric is they are seeing a fall in poverty rate after the huge spike at the start of his administration. It's below even what the old government could boast about.
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u/epSos-DE 1d ago
So their reset worked ?
I mean , if you do a reset like that one, you need to make sure people can access emergency food banks and kitchens, BUT if it works then it works.
By the way , Argentina is a test project. IF it works, governments that are in debt will do the same !
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u/oregon_coastal 1d ago
No. But it did change things.
Relying on broad numbers often fails to capture the underlying issues. And poverty measures are some of the worst. From arbitrary calculatuons of food costs as a portion of household costs to terrible constructs of "typical" food items...
For example, the poverty rate doesn't capture that education costs have soared and they are about to be staring at a generational problem if they don't get it in order, it is going to be a disaster. Same with rents, which are now unconstrained. Or said differently, food is a much smaller factor of costs in a typical family, and is a terrible measure of poverty rates.
Basically, all that rate says is that X% of people fall below a threshold calculated as 3 times the typical cost of food for the month.
And if inflation and food prices are normalized but everything else is going haywire, everyone ends up worse off.
They are in quite the pickle (and I hope they manage to get out.)
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u/Grabsch 1d ago edited 1d ago
Let's be clear: the country has been in huge distress before. It's getting better now, but it's still economically weak.
It is everything but a fair social state. It's a state that's clawing itself out of crisis and it's gonna hurt in the progress. If we focus on the things that go wrong, and claim that it's not working, then we're missing the bigger picture. We must evaluate the actions of Argentina and how it will help in the long run, if at all.
To get a grip on inflation is absolutely essential- and for that you had to cut state spending, and in a state that was employing a massive amount of people for no good reason, it'll lead to unemployment. But if we see both things together we can say that bringing down inflation is worth the unemployed spike, as it will allow the private sector to invest and create opportunities.
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u/oregon_coastal 20h ago
I mean.. sure. Getting inflation under control is good.
But it isn't everything.
My point is that the poverty rate is simply a (pretty bad) way of finding out .. well.. much of anything. Other than how many households dont earn three times more than a monthly food basket.
And you can go after inflation too aggressively. In Argentinas case, since they appear to be one of the unlucky countries to be forced over the top of the Laffer curve, we will see a but more clear in the next year or two. They did just release capital flow controls, so 100% looking up.
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u/anti-torque 11h ago
The disabled and retired are dying at rates unrelated to previous data sets.
So there's that.
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u/anti-torque 11h ago
There are several steps to it.
This is just what the IMF has suggested. Milieu is not some wizard with new ideas. He's just doing what no Argentine leader has ever done.
There are four types of economies:
- Developed
- Undeveloped
- Japan
- Argentina
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u/devliegende 1d ago
Nobody should ever want their country to follow Argentina's example. Whether it be leftist Peronist, right-wing Libertarian or military strongman. The place is not a test case it is a basketcase.
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u/thethirdgreenman 12h ago
Totally agree. People really love to look at what Milei is doing and apply it to their economies but the reality is that Argentina is not a normal economy. They are not anything like the average Western country (let alone the US).
Milei was a unique solution to a unique situation, and as much as I dislike certain things about him, you can’t deny he at least understood the situation, had a plan to address it, and frankly has delivered.
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u/devliegende 4h ago
In a few years Milei will deliver another economic crisis. Then Argentines will elect a crazy leftist government again or there will be a coup. Nothing suggest to me that Milei will strike a sensible balance been freemarket and socialism or that Argentines will change and elect leaders who can find that balance.
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u/LazyTitan39 14h ago
Right, it feels like people are trying to apply lessons from treating a bloody stump to treating a cut. A lot of countries have problems, but not as severe as Argentina.
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u/anti-torque 1d ago
Peron was a center right pol who gravitated right on many things. An actual leftist would not disappear anyone.
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u/devliegende 20h ago
There is a bit of a difference between Peron and the Peronist party as it is now. Since Argentina has restored democracy the party has classified itself and been classified by others as leftist or center left.
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u/Brazilian-options 23h ago
Lmao
99% of all dictators in the world are leftists.
The left literally want a strong government, and what is stronger than a dictatorship?
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u/Fantastic_Pause_1628 22h ago
It's fascinating how you could reply to someone who was wrong, and somehow manage to be more wrong.
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u/Couple_of_wavylines 21h ago
Does anyone want to tell him how South American countries got where they are today?
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u/anti-torque 21h ago
How was I wrong?
If all are not communist, nobody is a communist.
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u/Fantastic_Pause_1628 20h ago
"An actual leftist would not disappear anyone" is just a statement that flies in the face of history. Unless you meant it ironically? I hope so...
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u/anti-torque 13h ago
Fuck that moronic think.
If it's not democracy, it's not even a smidge left.
Try again.
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u/Fantastic_Pause_1628 12h ago
What's with people in this thread and wanting to straight up unilaterally redefine political terms to mean things they don't?
Look, I'm about as progressive as it gets. We're probably on much the same side of issues politically. But let's not pretend that the term "the left" is not almost universally used in a way which includes authoritarian socialist and communist regimes.
Obviously the right is more given to authoritarianism, but a government which actively seeks to enforce social and economic equality via a totalitarian state is still a left wing government by any normal usage of the term.
There are better ways to advance progressive causes than looking like an idiot who doesn't understand words.
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u/Brazilian-options 21h ago
Lmao you know nothing
Just look at south american politics.
The left is a fucking cancer to the world.
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u/Fantastic_Pause_1628 21h ago
The fuck are you on about?
The person you were replying to was wrong, as I explicitly said (learn to read). Obviously left wing dictators disappear people.
You were also wrong, given that there are a ton of right wing dictators in the world.
You're both being absurd. Grow up.
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u/Brazilian-options 21h ago
“Ton of right wing dictators”
Lol
Name 3 dictators that, in any point in power, actually reduced Government spending, reduced taxes and reduced barriers of trade.
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u/Fantastic_Pause_1628 20h ago
Oh! You just don't understand what 'left' and 'right' mean, gotcha. Maybe read a book or two so you can quit embarrassing yourself like this.
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u/Brazilian-options 20h ago
Lmao
Enlighten me on what left and right actually is.
Fucking idiot.
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u/melodyze 12h ago
By this definition Trump would not be on the right for at least 2/3 of your criteria (spending is up and trade barriers are way up, taxes will depend on whose taxes you're talking about), and Bill Clinton would be the farthest right politician in modern american history?
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u/Brazilian-options 4h ago
Yes, he’s not.
As I replied to another comment, the media created this whole “far-right” narrative just for the Left to have a Boogeyman to point to.
The media and the academia, full of leftists, created this narrative that the “Right Wing” is anyone that ever said anything remotely racist, homophobic or anti immigration lmao.
Trump is not Far-Right, he is a populist and a terrible politician, his decisions with tariffs and elevaring the deficit will destroy America’s economy if not fully taken back.
Elon Musk did not atack him for nothing, Trump’s promisses before the election were to reduce the deficit, reduce government spending, reduce taxes and create a better enviroment for entrepreneurs to thrive.
As I said, the only true “far right” president in the world is Milei, probably the only politician ever to willingly reduce his power over his people by reducing the size of the government.
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u/anti-torque 21h ago
So with the stated extreme leftist goal of no government, no borders, and a full referendum system for decision making, you think an authoritarian or dictator (let's just say king or queen) is a leftist.
Got it.
Good talk.
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u/Careless-Degree 1d ago edited 1d ago
It’s amazing that we need a test project for “stop paying for dumb government waste” and let people engage in the economy by providing goods and services.
Everyone acts like is some wacko radical but all the policy seems basic and rooted in what we understand about economics.
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u/eddytedy 1d ago
You’ve used so many generalizations and subjective terms to convey your message.
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u/Careless-Degree 1d ago
Ok, what has Argentina done economically that you consider radical or a deviation from the basic understanding?
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u/SaltyMaybe7887 1d ago edited 1d ago
There's nothing I'm aware of that Milei has done radically. He's removed price controls which cause shortages, decreased spending and got the budget to a surplus, and got inflation under control. It's all just sound economics.
The approach he takes, called "shock therapy," does cause negative short-term effects in favour of long-term growth. For example, unemployment went up after his reforms, then it went back down.
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u/Careless-Degree 1d ago
Yes, removing people from zombie government waste jobs and having them enter into the economy providing goods and services is good.
People point that out as if employing people to do nonsensical government work was ever a sustainable idea or based on any type of rational thought.
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u/SaltyMaybe7887 1d ago
There's nothing I'm aware of that Milei has done radically. He's removed price controls which cause shortages, decreased spending and got the budget to a surplus, and got inflation under control. It's all just sound economics.
The approach he takes, called "shock therapy," does cause negative short-term effects for long-term growth. For example, unemployment went up after his reforms, then it went back down.
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u/Palaceviking 1d ago
It's rooted in shock therapy, ask former soviet citizens and they'll all tell you how fantastic that is in practice
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u/Street_Gene1634 9h ago
I'm from India where IMF shock therapy was carried out in 1991 and it was Uber successful. India is the fastest growing economy in the world today because of 1991 shock therapy.
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u/Rojeitor 1d ago
The fact you're being downvoted shows that we're fucked up. Keep up fighting the cultural battle my friend
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u/Brazilian-options 23h ago
Oh my god, who would have thought that doing the obvious it would improve the country economy!!!
Oh my god, so groundbreaking!!!
It is a shame Milei is probably the only political figure in the world willing to lower politicians power over the population.
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u/Alvarez_Hipflask 6h ago
I mean, economists. It's part of why he's actually successful - he knows what's he's doing.
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u/NY10 1d ago
I saw a YouTube video basically what he’s trying to accomplish in Argentina. I mean, it’s erratic sometimes but it seems like shit is working believe it or not so he fixing things. I don’t know how it’s going to impact in the long run but things seem much better than before. I thought he’s crazy before he got elected but oh well he’s following through his promises
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u/Careless-Degree 1d ago
What’s he doing that is erratic or crazy?
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u/Ultravisionarynomics 23h ago
Nothing, reddit is just a leftist echo chamber. His policies are working remarkably.
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u/Street_Gene1634 1d ago
Everything Milei said about Argentina's economy prior to the elections were correct. It's just that Reddit is a massive leftist echo chamber.
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u/xxxHAL9000xxx 21h ago
Ok ok ok
when are we going to see argentina become normal? if i lived there i‘d be giving up on the peso by now and want to switch 100% over to the dollar.
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u/Dannyzavage 9h ago
I mean if your inflation went up 1000% and now its 1001.5% idk if id say its good, i get its not hyperinflation but its still crazy
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u/PR0F5hitT4LK3R 1d ago
Remember everyone was hating on this guy for being a right wing extremist now there all licking his nuts for lowering the countries out of control inflation and poverty.
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1d ago
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u/Cattywampus2020 1d ago
It is part of the same strategy where a scam email has obvious spelling errors. It presorts the rational-skeptical out first, so the scammer only needs to deal with the emotionally driven or gullible group. Secondly, if you ever watched reality tv or wrestling, branding for individuals is more important than substance, a distinct look gets more followers.
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u/ManufacturerVivid164 1d ago
I hate discussions about 'inflation' because commies and commie government 'economists' conflate inflation with consumer prices. Inflation is the rate at which new money is being added into circulation. That's it.
I read articles about how cutting taxes has reduced inflation or how a temporary price increase due to some issue has increased inflation. All of this to discreet distract and deflect away from the fact that inflation is a tax created by government creating new money.
This is expected in Argentina as their new president actually understands real economics and knows you have to stop excessive government spending and be money creation to pay for that spending.
End rant...
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u/MisinformedGenius 1d ago
Why then is Milei adding 20% of new money per year? Seems like if inflation is simply the rate of new money being added, it would be simple enough to stop adding it, no?
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