Inflation in Argentina was 54 percent in 2019, before falling to 42 percent in 2020. Despite Argentina's fluctuating economic instability over the twentieth century, the largest factor in its current economic status is the legacy of poor fiscal discipline left by the economic depression from 1998 to 2002. Although data is not available from 2014 to 2016, Argentina's inflation rate has been among the highest in the world for the past five years.

What causes inflation?

Inflation is a rise in price levels for all goods. Major causes of inflation include an increase in money supply, low central bank interest rates, and expectation of inflation. In a country such as Argentina, the expectation can be one of the biggest obstacles. People expect inflation to be high and demand increasing wages, and firms continue raising prices because they expect the costs of inputs to increase. Banks follow suit, charging high interest rates on fixed deposits.

Effects of inflation

Inflation negatively affects savers. 100 Argentinian pesos in 2018 was worth just under 75 pesos in 2019, after adjusting for the 34 percent inflation rate. Similarly, frequently changing prices has its own inherent cost, called “menu cost” after the price of printing new menus. Inflation will also have a positive effect on national debt when that debt is denominated in Argentinian pesos, because the pesos will be cheaper when the loan matures. However, the majority of Argentina’s debts are in foreign currency, which means that inflation will make these debts larger in peso terms.

The Consumer Price Index gauges the price changes in a basket of goods and services in a defined time period. In Argentina, the CPI in April 2024 was 289 percent higher than the one registered the same month of the previous year, with this figure being the largest monthly inflation rate since, at least, the beginning of 2018. The Argentinian inflation rate has been experiencing a steep increase from December 2020 onwards, when the decreasing trend witnessed since December 2019 came to an end. Long history of inflation in Latin America High inflation rates are nothing new in Latin America. In 2023, the region's inflation rate was 14.41 percent, while the global average was much lower at 6.78 percent. Nonetheless, the main drivers of this are Venezuela and Argentina, both being in the upper table of countries with the highest inflation rates in the world. During the last few years, Venezuela entered a period with five-digits inflation rates, having to issue a new currency and implementing new policies to control price increases.

A history of hyperinflation During the last couple of years, inflation has been a constant among the main problems the Argentine society faces. The country returned to a three-digit inflation rate with former president Alberto Fernández, and the constant price increases took a toll on households across the board. Nevertheless, the problem is far from a recent one or the worst it's ever been, in 1989 and 1990, the inflation rate was over 2,000 percent, reaching for the status of hyperinflation. Commonly, hyperinflation is defined as price increases with over 50 percent per month.

In 2022, there has been a constant increase in the year-over-year inflation rate in Argentina, which got its lowest value in January with a 50.7 percentage. On the contrast, the highest recorded value was in December with 94.8. Thus having an 86 share increase approximately from the base.

The Consumer Price Index gauges the price changes in a basket of goods and services in a defined time period. In Argentina, the CPI of housing, water, electricity, gas, and other fuels was the category that experienced the largest increase in October 2024 compared to the same month of the previous year, having grown 285 percentage points. It was closely followed by communications, with a year-on-year inflation rate of 257.6 percent. That same month, the overall inflation rate of Argentina stood at 193 percent, one of the largest figures registered since, at least, the beginning of 2018.

The annual average consumer price index in Argentina was forecast to continuously increase between 2024 and 2029 by in total 24,742.5 points (+202.76 percent). After the twenty-second consecutive increasing year, the index is estimated to reach 36,945.35 points and therefore a new peak in 2029. Notably, the annual average consumer price index was continuously increasing over the past years.As defined by the International Monetary Fund, this indicator measures inflation on the basis of the average consumer price index. This index measure expresses a country's average level of prices based on a typical basket of consumer goods and services during a certain year. Typically a reference year exists for which a value of 100 had been assigned.Find more key insights for the annual average consumer price index in countries like Paraguay, Uruguay, and Chile.

The Consumer Price Index (CPI) of housing, water, electricity, gas and other fuels in Argentina in January 2025 was 217.7 percent higher than the one registered the same month of the previous year. Year-on-year variation of prices of housing, water, electricity, and fuels has been experiencing an upward trend since September 2020. The overall inflation rate in Argentina presented a similar development since the second half of 2020.

The Consumer Price Index gauges the price changes in a basket of goods and services in a defined time period. During August 2024, the product category with the highest Consumer Price Index (CPI) increase compared with the previous month in Argentina was household, water, electricity, gas and other fuels with a seven percent increase. Followed by education with a 6.6 percent increase. Nonetheless, when compared with the previous year, communications registered the highest price increase with over 320 percent year-over-year. The expectation of inflation Despite Argentina’s efforts to reduce inflation, the country ranks in the top three Latin American countries with the highest rate, only with a lower figure than Venezuela and Suriname. The situation is not a recent one, the inflation rate has been reaching double digits every year since 2012, reaching over 50 percent in 2019, making the constant rising prices nothing out of the ordinary for Argentinian families. The expectation of inflation is one of the main causes of inflation with low central bank interest-rates and increases in the money supply, which helps to explain the chronic inflation of the country. Both firms and people expect inflation in their lives, workers demand increasing wages to coop with inflation, while companies increase prices of goods and services because they expect production costs to grow, creating a vicious circle in the economy. Inflation and poverty Inflation negatively affects consumers and savers alike. For the latter, 100 Argentinian pesos in 2020 was worth just under 52 pesos in 2021, after adjusting for the 48.41 percent inflation rate. For the consumers, rising prices of the basic products increase the vulnerability of the population. In January 2023, the value of the basic food basket, which establishes the extreme poverty line, stood at 23,315 pesos, more than ten times higher than during the same month in 2018. Between the first half of 2018 and the first half of 2022, the share of households under the poverty line increased by over 8 percentage points reaching 27.7 percent.

In December 2023, the region in Argentina with the highest annual change in the Consumer Price Index (CPI) was the Northeast area with 219.5 index points, which means that in around a year.

In December 2024, the inflation rate of food and non-alcoholic beverages in Argentina increased by 94.7 percent compared to the same month from the previous year.

Between December 2021 and December 2022, the health sector in Argentina had an average inflation rate of around 90.9 percent nationwide. By region, Cuyo, located geographically in the west of the South American country, which includes the provinces of Mendoza, San Juan, and San Luis, exhibited the highest average year-on-year inflation in the health sector during that period, with a rate of around 92.6 percent. The region of Greater Buenos Aires followed, with a change of prices in the health industry of about 91.7 percent within a year.

In December 2024, the inflation rate of alcoholic beverages and tobacco increased by 125.4 percent compared to the same month of the previous year. Inflation in Argentina For decades now, Argentina has struggled with one of the highest inflation rates in Latin America and the Caribbean. It is seen as the biggest problem in the country, and its impacts are felt in every aspect of life, including communications, housing, water, electricity, and gas, health services, transport, and food and beverages. Food inflation In August 2024, the Consumer Price Index (CPI) for food and non-alcoholic beverages in Argentina reached 7,611, the highest level in recent history, and over 237 percent higher than a year before. Despite this being a national problem, not all regions are affected the same way, and this increase has been felt most strongly in the Patagonia region. The lowest inflation rate, while still high, was recorded in the Northeast.

In 2023 and through 2024, the world saw inflation rates increase amid, among other things, post-COVID-19 effects and the Russia-Ukraine war. Argentina and Turkey were both plagued by hyperinflation, with over 219 and 58 percent in 2024, respectively. Except for these, Russia had the highest inflation rate, at nearly eight percent. On the other hand, China had the lowest rate of the countries included here, at 0.2 percent. Argentinian inflation crisis During the 2020s, Argentina was struck by extreme levels of inflation, which severely impacted the livelihoods of Argentinians. Specifically, the costs of goods have presented numerous challenges to Argentinian consumers. In Argentina, a basic food basket that costs around 26,000 Argentinian pesos cost over 100,000 by February 2024. Similarly, a basic consumer goods basket that cost around 57,000 Argentinian pesos in February 2023 rose to over 220,000 by February 2024. While these rising costs have been challenging for consumers, Argentina’s inflation rate is expected to decrease beginning in 2024 and is estimated to reach 8.9% by 2029.

British recession Besides the outliers of Argentina and Turkey, the United Kingdom had a comparatively high CPI rate. As of 2024, the British economy has entered a recession, the only G7 country to do so. Just before the general election held in July 2024, British voters indicated that health, mostly the lack of financial support and staff shortages, as well as the economy was the most important issue to them.

From December 2016 to July 2024, there was an overall increase in the Consumer Price Index (CPI) for goods and services in Argentina. The exponential growth took its peak in the second half of the last year. Goods had a considerably higher increase, reaching over 7,148 index points, while services remained at 5,560.

The Consumer Price Index (CPI) of transportation in Argentina in August 2024 was 270.6 percent higher than the one registered the same month of the previous year. Overall, the Argentinian inflation rate has been experiencing a steep increase from December 2020 onwards.

In December 2024, the Consumer Price Index (CPI) for food and non-alcoholic beverages in Argentina reached 8127.8. In contrast, in the same month of the previous year, the value was of 4173.7.

In December 2024, the inflation rate of food and non-alcoholic beverages in Argentina was felt most strongly in the Patagonia region, where the inflation rate increased by 111 percent compared to the same month of the previous year. Compared to the other regions, the Northeast had the lowest inflation rate, with a 78.7 percent increase compared to November 2023.

In December 2024, the region with the highest Consumer Price Index (CPI) for coffee, tea, yerba mate, and cacao was Patagonia, with a CPI of 8953.1. In contrast, a year earlier, the CPI of meat in that region amounted to 4553.4.

Argentina's dairy industry is experiencing significant price volatility, with the Consumer Price Index (CPI) for dairy products in the Greater Buenos Aires region reaching 9514.1 in December 2024. This marks a dramatic increase from 3998.9 just a year earlier, highlighting the rapid inflation affecting the sector. The surge in dairy prices is part of a broader trend of rising food costs across the country, impacting consumers and the industry alike. While the Greater Buenos Aires region leads in dairy product CPI, other regions are also experiencing substantial increases. For instance, the Pampeana region saw its bread and cereals CPI rise to 8405.1 in November 2024, up from 3247.2 the previous year. These price hikes are occurring despite the relatively stable milk consumption volume. In 2022, Argentina's milk consumption reached 11.9 million metric tons, with a slight increase to 12 million metric tons projected for 2023. Despite the challenging economic environment, some dairy brands have maintained strong consumer loyalty. In 2023, La Serenísima led the market, followed by La Paulina and Ilolay. However, the industry faces headwinds, as evidenced by the industrial production index (IPI) for dairy products, which stood at 127.5 points in August 2024, representing a 6.6 percent decrease from the previous year. This decline in production, coupled with rising prices, suggests potential challenges for both consumers and producers in the Argentine dairy market.

2022 and 2023 saw inflation rates rise all over the world, especially spurred by effects of the COVID-19 pandemic and Russia's invasion of Ukraine. With its hyperinflation, Argentina was predicted to have the highest inflation rate of the countries included here both in 2023, 2024, and 2025. On the other hand, China's inflation rate was estimated to only reach one percent in 2024.

In 2023, no Latin American or Caribbean country registered deflation in their average consumer prices. Costa Rica had the lowest change compared to the previous year with 0.52 percent. In contrast, the average inflation rate in Venezuela amounted to about 337.46 percent.

Latin America among the highest inflation rates in the world In 2023, the average inflation rate of the region was around 14.41 percent. Which is significantly higher than the global average of 6.78 percent. Some of that is explained by countries such as Venezuela, Argentina, and Suriname ranking in the top then of countries with the highest inflation rate in the world.

Chronic inflation in Latin America Chronic inflation is often defined as persistent high inflation throughout a long time. Some of the common examples of this problem are Venezuela and Argentina, both countries had episodes of hyperinflation, with price increases considerably over 50 percent per month in both cases. The last few years, the global crisis and economic sanctions, attenuated the situation with Argentina reaching once again three-digit inflation and Venezuela exceeding 63,000 percent inflation in 2019.