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Argentina's inflation edges up in June, breaking a months-long streak in a blow to President Milei

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Argentina's inflation edges up in June, breaking a months-long streak in a blow to President Milei
News

News

Argentina's inflation edges up in June, breaking a months-long streak in a blow to President Milei

2024-07-13 10:17 Last Updated At:10:20

BUENOS AIRES, Argentina (AP) — A closely watched measure of inflation in Argentina was stronger than the libertarian government of President Javier Milei would have hoped on Friday, as the official statistics agency reported prices edging up in June and breaking a months-long streak of declines.

Argentina's consumer price index rose 4.6% in June, slightly up from the rate of 4.2% in May, ending a five-month trend of cooling inflation that experts had attributed to a deepening recession brought about by Milei's harsh austerity. The International Monetary Fund predicts a 2.8% contraction this year.

President Milei has touted the falling prices over recent months as a victory in his fight against Argentina’s worst economic crisis in over two decades.

After Milei took office in December, monthly inflation peaked at 25%. But the price drop since hasn't offered much relief to ordinary Argentines as Milei presses on with a radical economic overhaul that involves slashing generous energy subsidies, scrapping price controls and devaluing the Argentine peso.

“The world that the government lives in, with all these numbers saying the economy is great, it's a fantasy,” said 34-year-old taxi driver Jose Rafael in Buenos Aires. “In the real world, this economy makes it really hard to feed my son.”

Friday’s government report showed Argentina’s annual inflation slowing a bit to just over 271% — still among the highest rates in the world.

Surging electricity and gas prices accounted for most of June's inflationary spike, the statistics agency said. Argentines have reported eye-watering utility bills after years of paying highly subsidized rates under left-leaning governments.

In stark contrast to Milei's program, those past Peronist administrations fixed prices and printed billions of dollars’ worth of pesos to fund a large deficit — fueling chronically high inflation.

Under Milei, Argentina's energy ministry reported in June that low-income households that previously paid just 5% of the real cost of electricity have started paying a third of it while middle-income households now cover at least half following Milei's removal of subsidies.

The government has also capped electricity consumption to qualify for subsidies, squeezing families as a cold front sweeps Argentina during the Southern Hemisphere’s winter.

The country's cost of living surged nearly 80% in the first five months of 2024 compared to the same period last year, the report also said. Prices in Buenos Aires shops and restaurants have reached levels comparable to the United States, even as the country offers just a fraction of the wages.

In another warning sign, the peso fell Friday to another record low against the dollar, hitting 1,500 on the black market and capping another week of volatility after holding steady in the first few months of the year.

The steep fall in Argentina’s currency means the closely watched gap between the black market rate and the official exchange rate, currently 919 pesos to the dollar, has widened to over 60%. That complicates Milei's goal of eventually lifting Argentina's strict currency controls to restore investor confidence.

Milei wants the IMF — to which Argentina already owes a staggering $44 billion — to step in with a new loan to support his plans to remove capital controls, which cause major distortions in Argentina’s economy.

But as uncertainty remains over the future of Milei's economic program, the IMF dampened expectations of a new deal on Thursday.

“The staff will engage in discussions on a possible new arrangement as we would with any IMF member," the fund's spokesperson, Julie Kozack, told reporters when asked about the state of negotiations. "At this stage, there is no specific timeline for those discussions.”

FILE - Argentine President Javier Milei walks arm-in-arm with Vice President Victoria Villarruel during Independence Day celebrations, in Buenos Aires, Argentina, July 9, 2024. Argentina's consumer price index report released Friday, July 12, 2024, showed Argentina’s annual inflation slowing a bit to just over 271% — still among the highest rates in the world. (AP Photo/Natacha Pisarenko, File)

FILE - Argentine President Javier Milei walks arm-in-arm with Vice President Victoria Villarruel during Independence Day celebrations, in Buenos Aires, Argentina, July 9, 2024. Argentina's consumer price index report released Friday, July 12, 2024, showed Argentina’s annual inflation slowing a bit to just over 271% — still among the highest rates in the world. (AP Photo/Natacha Pisarenko, File)

Next Article

Ireland is finally set to get a new government, led by a familiar face

2025-01-22 17:21 Last Updated At:17:30

DUBLIN (AP) — Veteran politician Micheál Martin is set to become Ireland's prime minister for a second time on Wednesday when lawmakers formally approve him as head of a coalition government.

The confirmation comes almost two months after an election in which Martin’s Fianna Fáil party won the most seats, but not enough to govern alone.

After weeks of talks, the long-dominant center-right parties Fianna Fáil and Fine Gael agreed to form a coalition with the support of several independent lawmakers.

Under the deal, Martin. 64, will be taoiseach, or prime minister, for three years, with Fine Gael’s Simon Harris – the outgoing taoiseach – as his deputy. The two politicians will then swap jobs for the rest of the five-year term.

Members of both parties have ratified the government agreement, and Matin is set to be confirmed by members of the Dáil, parliament’s lower house, on Wednesday. He will then be formally appointed to the job by President Michael D. Higgins before appointing his Cabinet.

In Ireland’s Nov. 29 election, voters bucked a global trend that saw incumbent governments ousted around the world in 2024. Fianna Fail won 48 of the 174 legislative seats and Fine Gael 38. They’ve secured backing to govern from the mostly conservative Regional Independent Group, which will be given two ministerial positions.

Fine Gael and Fianna Fáil share broadly similar center-right policies but a century-old rivalry stemming from their origins on opposing sides of Ireland’s civil war in the 1920s. They formed an alliance after the 2020 election ended in a virtual dead heat.

Their new agreement shuts out left-of-center party Sinn Fein, which will stay in opposition despite winning 39 seats. Fine Gael and Fianna Fail have refused to work with them because of their historic ties with the Irish Republican Army during three decades of violence in Northern Ireland.

The new government faces huge pressure to ease rising homelessness, driven by soaring rents and property prices, and to better absorb a growing number of asylum-seekers.

The cost of living — especially Ireland’s acute housing crisis — was a dominant topic in the election campaign, and immigration has become an emotive and challenging issue in a country of 5.4 million people long defined by emigration.

Fianna Fail leader Micheal Martin and deputy leader Jack Chambers during the Fianna Fail ard fheis conference at the Radisson Hotel, in Dublin, Sunday Jan. 19, 2025. (Gareth Chaney/PA via AP)

Fianna Fail leader Micheal Martin and deputy leader Jack Chambers during the Fianna Fail ard fheis conference at the Radisson Hotel, in Dublin, Sunday Jan. 19, 2025. (Gareth Chaney/PA via AP)

Fianna Fail leader Micheal Martin speaks to the media, in Dublin, Sunday Jan. 19, 2025. (Gareth Chaney/PA via AP)

Fianna Fail leader Micheal Martin speaks to the media, in Dublin, Sunday Jan. 19, 2025. (Gareth Chaney/PA via AP)

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