By Gabriel Burin
BUENOS AIRES, April 13 (Reuters) – Argentina’s consumer price inflation is set to cool this year by less than previously expected even as economic growth expectations have remained steady, a Reuters poll of economists showed on Monday.
The latest survey results demonstrate how the oil shock from the U.S.-Israeli war with Iran nL6N40V09S has further complicated President Javier Milei’s efforts to tame price pressures while avoiding restraining the economy any more.
However, average inflation is still forecast to end 2026 at 30.0%, the lowest annual rate in nine years, according to the median estimate of 22 economists polled in the April 6-10 period.
That reading would be down from 44.5% last year and nearly 300% in early 2024, shortly after Milei took office, underscoring the government’s biggest success as it presses on with controversial cost-cutting measures nL6N3ZF0QY.
In January, inflation had been forecast at 25.3%. For next year, the consensus estimate of this month’s poll was 21.0%, above the 15.6% expected in the last survey.
Prices likely rose 3.0% in March, a bit more than 2.9% in February, which would mark the biggest month-on-month rise in a year, according to the median estimate from 20 economists surveyed separately.
Kevin Sijniensky, chief economist at Econviews, said March “is going to be the worst number of the year,” but he expected a weaker rise this month, based in part on signs of a small drop in meat prices at the start of April.
After that time, “inflation could persist a bit more this year on second-round effects from the war, with higher prices of petrochemical and chemical products as well as freight and other costs,” he said.
The 12-month inflation rate is seen at 32.2% in March compared to 33.1% in February, according to the poll. The official data are scheduled to be released on Tuesday.
SMALL RATE CUTS EXPECTED TO MITIGATE PAIN
Apart from the energy shock, consumer price trends are supported by a moderate increase in the money supply through short-term government debt operations nS0N3ZK04V aimed at delivering small interest rate cuts.
But the cost of borrowing remains high due to Argentina’s elevated country-risk premium that drove Milei to postpone a plan to regain access to international debt markets this year.
The economic team “has become a bit more dovish in order to give activity breathing room through better credit lines and lower rates,” said Pedro Siaba Serrate, head of research and strategy at Portfolio Personal.
“The economy is undergoing a paradigm shift that is painful: the sectors that benefit most are closely related to exports, much more capital-intensive.”
Gross Domestic Product is forecast to expand by 3.0% in both 2026 and 2027, the poll showed, thanks to booming oil production nL6N40E0Y1, fast-developing mining activity nL6N4071G8, and a bountiful harvest nL6N40R1H7. That prediction is unchanged from a poll taken three months ago.
With Milei’s fiscal austerity plans mostly on track, his team will meet officials of the International Monetary Fund at the global lender’s spring meetings in Washington this week to seek approval for a pending IMF disbursement.
“It will be the time to reach a staff-level agreement, which would be a first step,” said Lorenzo Sigaut Gravina, director of macroeconomic analysis at consultancy Equilibra, pointing at Argentina’s efforts to prop up the reserves of its central bank.
“Except for the issue of net reserve accumulation, the one with the biggest deviation (of Argentina’s IMF program), the rest are quite advanced and perhaps the board will approve the disbursement in May.”
(Reporting and polling by Gabriel Burin and Hernan Nessi; Editing by Jonathan Cable, Ross Finley and Paul Simao)
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