Inflation in Argentina was estimated to have eased to 8.8% in April, slowing for a fourth consecutive month after hardline liberal President Javier Millay took office, but remained at a spectacular 289.4% year-on-year as eyes they turn to the impact of the recession.

The April price index, published yesterday by the national statistics institute (INDEC), fell below the 10% mark for the first time in six months (since October). Its downward trend continued (from 25.5% in December to 20.6% in January, to 13.2% in February, to 11% in March).

On an adjusted basis, inflation in Latin America’s third-largest economy still reached 65% in the first four months of 2024 and 289.4% year-on-year — levels the country had not seen in 33 years.

Inflation in April was driven by the prices of water, electricity, natural gas and, more broadly, fuel, which are rising as long-term government subsidies for these items are being phased out, as part of a policy with a stated goal of “zero deficit” by the end of 2024.

But the impact of the 54% devaluation of the peso (as of December), the so-called price liberalization, the removal of subsidies, the paralysis of public works, falling purchasing power and anemic consumption is being felt as Argentina gradually sinks into recession.

Industrial production shrank in March by 21% year-on-year, construction activity by 42%. While private consumption, the Focus Market institute recorded, fell by 20.4% year-on-year in April.

Argentina’s economy will shrink by 2.8% of GDP this year, according to estimates by the International Monetary Fund (IMF), after already contracting by 1.6% in 2023.

“We are crushing inflation,” President Miley triumphantly said on Tuesday ahead of April’s data, which analysts had expected would slip below the 10% mark.

“Prices are rising, but not as catastrophically as a few months ago. We would say that they are stabilizing, but since wages do not follow inflation, it is as if we do not see any change,” summed up Marilina Hill, a 46-year-old supermarket worker, speaking to AFP.

The day before Monday, the IMF praised Argentina’s “faster-than-expected progress in restoring macroeconomic stability”, notably “the first quarterly fiscal primary surplus in 16 years”. At the same time, he acknowledged that there is a “long and difficult way” to go in order to increase “productivity, private investment and formal employment”.

At the end of 2023, the informal sector employed 45.3% of the working population, while poverty afflicted 41.7% of citizens, according to official data — before the impact of austerity measures had even begun to be felt.