The Japan Times - Argentina Inflation Rises to 2.2% in October Amid Core Price Decline

Argentina’s headline inflation accelerated to 2.2% in October, marking its highest monthly rate since April and surpassing the 2% threshold for the first time in three months. According to data released Thursday by the national statistics agency INDEC, the rise was primarily driven by seasonal food prices and adjustments to regulated energy tariffs, even as core inflation dropped to its lowest level in nearly ten years.

The October figure represents the second consecutive monthly increase, following a 1.9% reading in September. It stands as the highest inflation rate recorded since April, when it reached 2.6%. On an annual basis, prices rose 33.1%, while cumulative inflation for the first ten months of the year reached 26.3%.

Despite the uptick in headline figures, core inflation—the measure that excludes volatile seasonal items and government-regulated prices—fell to 1.5% from 1.7% in September. This marks the lowest level of core inflation recorded during President Javier Milei’s administration, with the only previous instance occurring in July 2025. The last time core inflation was lower was in November 2017, when it stood at 1.3%.

The divergence between headline and core inflation stems from specific categories that experienced significant price hikes. Seasonal prices rose by 5.5%, driven largely by increases in vegetables, tubers, and legumes. Regulated prices increased by 2.9%, reflecting higher costs in gas and motor vehicle fuel.

Economy Minister Luis Caputo attributed the rise in regulated prices to policy changes affecting specific regions. In an analysis posted on X, Caputo stated that the figure was affected by modifications to the Cold Zone Regime, a system of subsidized natural gas tariffs for colder areas of Argentina. He noted that this policy shift influenced the variation recorded in the housing, water, electricity, gas, and other fuels category.

Analysts at brokerage firm Puente echoed this assessment, suggesting that the modification of the Cold Zone Regime likely impacted the regulated-price subindex. Their breakdown showed that the largest monthly increase was recorded in the housing and utilities category at 4.2%, with regional variations ranging from a decrease of 2.2% to an increase of 11.1%.

Other categories also saw notable shifts. Recreation and culture prices rose by 3.3%, while the smallest increases were seen in alcoholic beverages and tobacco (0.8%) and education (1.3%).

The inflation data disappointed financial markets, as analysts had expected headline inflation to come in at approximately 1.8%. Guido Zack, Director of Economics at the Fundar think tank, told the Herald that while the decline in core inflation is an encouraging sign within an unfavorable context, it does not necessarily indicate a new trend.

Zack emphasized that both headline and core inflation are showing greater volatility than usual. He cautioned against viewing the 1.5% core figure as a new ceiling, noting that part of the upward pressure on regulated prices might reverse in November but could also persist.

Puente analysts added that it remains to be seen whether headline inflation will converge with core inflation once temporary factors pass, though they warned that the impact of the Cold Zone Regime changes may continue to be felt in the coming month. Zack concluded that despite the drop in core measures, the government and Argentina as a whole are still struggling to definitively push monthly inflation below the 2% threshold.

S.Fujimoto--JT