In just 1.5 years, Argentine President Javier Milei has radically cut inflation, fulfilling one of his campaign promises. However, despite this achievement, Argentina remains one of the most expensive countries in Latin America. Cesar Martinez, a 45-year-old butcher, works full-time but has had to take on additional jobs to make ends meet. “The money one makes is never enough to afford everything, even the most basic things,” he says.
The sentiment is shared by many on the streets of Buenos Aires. While inflation has dropped significantly, from a record monthly rate of 25 percent in December 2023 to 1.6 percent, the country’s economy remains challenging. Argentina has a history of high inflation, and people tend to think that all their problems are related to inflation. For people here, stability is very important.
Milei’s economic programme has made radical cuts to public spending, including in healthcare, education, social services, and public infrastructure works, to achieve a fiscal surplus. However, this programme has also involved an early nominal devaluation, which has made the country more expensive in dollars. Combined with a sharp fall in real wages, this has delivered a significant blow to the purchasing power of large sections of the population.
Argentina is now among the most expensive countries in Latin America, but it also has some of the lowest salaries. While tackling inflation was essential to start fixing Argentina’s ailing economy, it’s proving not to be enough, experts say. “Inflation isn’t everything,” Guido Zack, economy director at Fundar, a national think tank, told Al Jazeera. “Having a low inflation rate is important, but [in Argentina] the economic recovery has been very mixed among sectors of the economy and of the population.”
The mismatch between some economic indicators and what people are experiencing in their daily lives is what the Observatory of Social Debt of the Catholic University of Argentina has called “economic stress” — the increased perception, or reality, that most salaries are not enough to cover basic living expenses. This is particularly evident in the country’s increasing rate of personal borrowing. According to a recent report, 91 percent of homes in Argentina have some form of debt, and 58 percent of those loans were taken to buy food in 2024.
Pensioners have been protesting against Milei’s austerity measures and their monthly pension, which is below the minimum wage. Raul Maldonado, a 68-year-old retiree, says: “The money I earn lasts 15 days. If it wasn’t for the help of my family, I would not be able to survive.” The current pension for five million people stands at $300 a month, and Milei has promised to veto a bill approved by Congress for a rise in pensions.
As Milei promises to continue pushing through with his current economic plan, the question is whether he can keep inflation down and adopt measures to improve other indicators. Experts say that the type of anti-inflationary programme, focused on cuts to public spending and an appreciated currency, is similar to others implemented in Argentina in the past, but which failed to work in the long run.
“At first, these kinds of programmes can bring people some initial relief – they generate some economic bounce back and, to a certain extent, an increased income to some high-earning sectors,” Mariana Heredia, a researcher at the National Scientific and Technical Research Council (Conicet), said. “But in the midterm, the costs start to show when it comes to the public spending cuts, the opening of the economy to imports that affect local production and its impact on the job market.”