« Inflation has been defeated »
This is the government's flagship argument, repeated everywhere: monthly inflation has fallen from more than 25% to around 2%. It is real and it is a relief after years of drift.
But part of this disinflation has a hidden cost: to slow down prices, the government held back the rise of the official dollar much faster than inflation. As a result, the peso becomes artificially « expensive » — this is the exchange-rate lag. Yet, in Argentine history, an overpriced peso almost always ends in a brutal devaluation… which reignites inflation. Today's low inflation is therefore partly borrowed from tomorrow.
When prices (red) rise faster than the dollar (blue), the peso reappreciates in real terms: the competitiveness gained from the Dec. 2023 devaluation fades away.