Inflation Plateaus Under Pressure
Argentina's monthly inflation rate held at 2.9% in February 2026, remaining unchanged from January 2026 and exceeding the Bloomberg consensus estimate of 2.8%. This marked the ninth consecutive month without a decline in the monthly rate. The annual inflation rate accelerated to 33.1% from 32.4%, also surpassing the 32.9% consensus, as new external shocks began to weigh on the economy.
The report said President Javier Milei’s initial success in reducing triple-digit price growth has reached a plateau. Accumulated inflation for the first two months of 2026 reached 5.9%, already exceeding half of President Milei’s 2026 annual budget target of 10.1%, a figure that most private-sector economists consider unattainable.
Fuel, Food, and the Cost of Living
The primary drivers of the monthly surge in February 2026 were housing, water, electricity, gas, and other fuels, which collectively jumped 6.8%, more than doubling January's 3.0% increase. Gas prices alone rose 17% in February 2026, following an adjustment announced by the Energy Secretary in January 2026. Food and non-alcoholic beverages, which constitute 23% of Argentina’s Consumer Price Index basket, increased by 3.3%, largely due to rising meat prices.
The ongoing Iran conflict has introduced a supply-side shock, contributing to an approximately 6% rise in Argentine fuel prices so far in March 2026. This increase is partly due to a monthly 1% fuel tax hike and catch-up adjustments, but increasingly driven by surging global crude costs. Consultant EcoGo estimates that March 2026 inflation will remain at 2.9%, with 0.3 percentage points attributable to the oil price spike.
State Firms, Methodology, and Fiscal Strain
State-controlled YPF, which controls over half of the domestic fuel market, has pledged to prevent price shocks at the pump, though its capacity to absorb higher crude costs indefinitely is limited given its investment requirements. JPMorgan analyst Lucila Barbeito identified a core dilemma: while goods inflation has decreased rapidly due to trade liberalization and lower import tariffs, services such as rents, utilities, and healthcare remain sticky because they track wages rather than the exchange rate.
With fiscal revenues falling nearly 9% year-on-year compared to March 2025, the government faces a difficult choice between maintaining its fiscal surplus through continued subsidy removal, which fuels inflation, and easing the pace of adjustment, which risks its market credibility. The departure of the statistics agency chief amidst disagreements over a new CPI methodology that would have given more weight to services has added institutional uncertainty. Economy Minister Luis Caputo argued that altering the CPI methodology now would be negatively perceived, acknowledging the importance of optics in a country with Argentina’s inflationary history. Central bank survey respondents project 26% annual inflation by year-end and 3.4% GDP growth in 2027. The report was authored by Sofia Gabriela Martinez.