海角大神

Inflation has improved in Argentina. Why consumers don鈥檛 feel a difference.

When Rub茅n Cocurullo thought about his retirement from electromechanical engineering, he imagined quiet days spent with loved ones and visiting parts of his country he鈥檚 never seen 鈥� not running from the police at public protests.

Mr. Cocurullo, in his late 70s, is one of the hundreds of pensioners who demonstrate every Wednesday in front of the Argentine Congress for a raise in their pensions. For many retirees the payments are not enough to make ends meet, despite the prevailing narrative that Argentina is transforming into an economic success story.

Tackling inflation and stabilizing the economy were central promises of President Javier Milei, who rose to power on a populist platform of extreme cuts in social spending. This spring, his government celebrated first signs of success as inflation hit 1.5% in May, the lowest rate in five years. In 2023, just before Mr. Milei took office, Argentina faced an annual inflation rate of 148%.

鈥淲e have the best economy minister in,鈥� Mr. Milei announced on social media in April. Days later the government ended historic currency and capital controls, another milestone. These controls had restricted access to foreign currency, particularly the U.S. dollar.

Despite celebrations from the Casa Rosada, the Argentine equivalent to the White House, citizens like Mr. Cocurullo say pressures on their pocketbooks have not eased. That鈥檚 in part because even as overall inflation has fallen, basic food and service costs increased by 25% over the past calendar year. Gasoline prices rose roughly 30% in the same period.

As Mr. Milei moves ahead with economic austerity plans, Argentines are left wondering how long they will struggle economically before the government鈥檚 triumphs feel like victories of their own.

This government鈥檚 legitimacy stands on 鈥渢wo kinds of hope,鈥� says Ezequiel Ipar, a sociologist at Buenos Aires University.

A 鈥渉ope related to fixing the economy,鈥� says Dr. Ipar, who studies the global political far right. And the hope for an end to deeply conflicting views on social spending, as more people have become open to making those cuts now than prior to the pandemic.

Easy to explain, hard to understand

Fernando Savore, vice president of the Almacenera General Confederation, a group of small and medium-size shop owners, sees customer purchasing decisions nationally, and in his own shop, where he sells products like rice and noodles. In recent months, while inflation has fallen, customers still come in with 鈥渁 thin little wallet,鈥� he says, since electricity, internet, gas, heating, and transport costs have all gone up.

鈥淐ustomers minimize their purchases, buying products only for the day,鈥� a pattern Argentines have lived in previous recessions. 鈥淲e don鈥檛 see an increase in consumption ... Even though my colleagues and I haven鈥檛 changed our prices.鈥�

While fighting inflation has been a banner project for Mr. Milei, what gets less airtime are the shock measures implemented to achieve his goal. His administration has halted subsidies, and allowed prices on essential services like gasoline to be set by the free market 鈥� without increasing wages.

Despite the economic pains, Roberto Amirotti, a local politician from the ruling La Libertad Avanza, is optimistic that average Argentines will see improvement in their household economies. 鈥淧rices are falling, not rising any further, and salaries are adjusting,鈥� he says.

The 鈥淎rgentine state is not issuing more money than necessary and, most importantly, it does not spend more than what is collected,鈥� says Mr. Amirotti, who leads the party in San Vicente, on the outskirts of Buenos Aires.

Big numbers vs. personal experience

Fabi谩n Medina, a Buenos Aires University economist, says the big picture of success lacks human perspective.

鈥淭he key鈥� for the government to be able to decrease inflation 鈥渨as in entering a huge recession and freezing pensions and wages,鈥� Dr. Medina says. 鈥淭his happened when the government just started, and purchasing power never recovered.鈥�

He points to the devaluation of the peso on Dec. 11, 2023, the day after Mr. Milei took office. From one day to the next the number of pesos it took to buy one U.S. dollar nearly doubled, generating an automatic rise in all prices linked to the dollar. In Argentina, where the economy has a historic dependence on the U.S. dollar, that translated to a general increase in prices here.

鈥淭his is a historic drop in purchasing power that hasn鈥檛 recovered, even today,鈥� Dr. Medina says. So, even with inflation rates falling drastically, 鈥渟alary increases were always behind that,鈥� and the costs of essential services have been steadily climbing, he says.

Some services like natural gas have increased nearly 1,500% since 2023.

As of June, Argentina faced its 18th month of falling consumption, according to Scentia, a local consulting firm.

Waiting on change

Dr. Ipar, the sociologist, says that to understand Argentina today, including expectations for the economy, one has to look at young people and how their ideas around 鈥渉ope鈥� shifted since the global pandemic. There is more acceptance for 鈥減unitive鈥� cuts to social spending, propelled by populist rhetoric from Mr. Milei, he says.

The city of Buenos Aires has violently repressed peaceful protests by retirees, for example, and in a shift from under past governments, citizens are tolerating it 鈥� even electing the government鈥檚 candidate in city midterm elections. For Dr. Ipar, this signals growing intolerance for social issues long associated with the Argentine identity, whether women鈥檚 rights or welfare spending.

鈥淭he way this government builds its legitimacy is aggression, delegitimization, and attack,鈥� Dr. Ipar says. Even when 鈥渋nflation control might be the main political asset for the government鈥檚 image, you can鈥檛 read that without all the other elements鈥� related to waging a culture war in the name of saving the economy, he says.

That鈥檚 where neighbors are stepping in. From public schools to the pension protestors, those in need are turning to the people closest to them for assistance instead of the government. For decades, social safety nets were central to government programming here. Today, as many national programs are cut under Mr. Milei鈥檚 austerity approach, there is a network of local, provincial, and nonprofit actors racing to help those most vulnerable.

鈥淲e all try to do collective work here,鈥� says Valeria Kernel, a teacher in a low-income neighborhood on the southern edge of the capital, where she and others try to help feed students who arrive to school hungry.

It鈥檚 the same for the pensioners in Buenos Aires. After months of gathering, the weekly Wednesday protestors are not only dedicated to public demonstrations but assisting one another with financial and emotional support.

Helping one another 鈥渋s the human thing to do,鈥� Mr. Cucurullo says.

鈥淚 hope to live long enough to see our situation change.鈥�