Inflation Is Falling, But Argentines 'Are Not Yet Better Off': Milei's Gamble Under Fire

[Avocado]

I am getting tired of people saying things are better in Argentina. Everyone is suffering. My friends who formally supported him are running out of patience with him. I do not believe the positive polling numbers. I think they are fake.

Basic costs have soared since Milei took office. Bus and train fares in greater Buenos Aires jumped more than 300% after transport subsidies ended. Electricity and gas prices shot up 430%. Overall, consumer prices in the capital region climbed 122%.

Inflation Is Falling, But Argentines 'Are Not Yet Better Off': Milei's Gamble Under Fire

Argentina’s sharp economic reforms cut inflation but pushed more than half the population into poverty, raising questions about President Javier Milei’s austerity drive. Monthly inflation dropped to 2.7% in December from 25.5% a year earlier, according to The Economist, citing data from INDEC...

finance.yahoo.com

 

[Larry]

I agree! I have been saying this government has phony numbers. I think they are cooking books on inflation and salary numbers and also positive approval ratings and poverty levels. Each day I see more and more people on the streets.

 

[CraigM]

Think I said this before, but it is unfortunately the way of things. In these sorts of turnarounds where deep austerity programs are the first order of business, it hits low income people the hardest while those with assets benefit from buying cheap stocks and property and watching them rise quickly. It takes awhile before you start seeing real job creation that affects the entire population. Companies are understandably leery of investing in Argentina (especially hard assets) due to a very long history of confiscation through excessive taxation, corruption, bureaucracy and outright annexation. The same fellow who stole YPF is today the governor of your largest province - what are company leaders supposed to think about that when deciding whether to put billions of dollars of plant & equipment into Argentina? It is unfortunate but you're not going to see decades of terrible government reversed overnight.

One big advantage Argentina has though is that the US governement is keen to invest. China has been throwing money all over Latin America the past 20 years, buying up resources and even governments. The US knows they let this go too far, and the time is right because China is struggling for the first time in decades and has to pause their global ambitions. Milei's relationship with Trump has to be a big advantage here. I think you will see the US government offering sweetheart loans to US companies to put money into Argentina.

 

[Peabody]

Think I said this before, but it is unfortunately the way of things. In these sorts of turnarounds where deep austerity programs are the first order of business, it hits low income people the hardest while those with assets benefit from buying cheap stocks and property and watching them rise quickly. It takes awhile before you start seeing real job creation that affects the entire population. Companies are understandably leery of investing in Argentina (especially hard assets) due to a very long history of confiscation through excessive taxation, corruption, bureaucracy and outright annexation. The same fellow who stole YPF is today the governor of your largest province - what are company leaders supposed to think about that when deciding whether to put billions of dollars of plant & equipment into Argentina? It is unfortunate but you're not going to see decades of terrible government reversed overnight.

One big advantage Argentina has though is that the US governement is keen to invest. China has been throwing money all over Latin America the past 20 years, buying up resources and even governments. The US knows they let this go too far, and the time is right because China is struggling for the first time in decades and has to pause their global ambitions. Milei's relationship with Trump has to be a big advantage here. I think you will see the US government offering sweetheart loans to US companies to put money into Argentina.

I see both sides of this. Seems like the poorest and middle class are paying the biggest toll. The rich are just getting richer it seems like. My poor friends are struggling and stopped eating beef. My more affluent friends here all got rich buying banking stocks and oil and utility stocks last year. These are the same people that brought back billions with the blanqueo and many of these people are buying new construction and it is going up every month. They are just getting richer.

Craig you are right about the governor. I don't understand why there is not more backlash against him. But do you really think USA will give Argentina much besides help with IMF loans? I would like to think they will help but I hear Trump saying USA doesn't need Latin America and other talk like that. I wonder if Argentina will get much out of the relationship with Trump other than help from IMF?

 

[CraigM]

I see both sides of this. Seems like the poorest and middle class are paying the biggest toll. The rich are just getting richer it seems like. My poor friends are struggling and stopped eating beef. My more affluent friends here all got rich buying banking stocks and oil and utility stocks last year. These are the same people that brought back billions with the blanqueo and many of these people are buying new construction and it is going up every month. They are just getting richer.

Craig you are right about the governor. I don't understand why there is not more backlash against him. But do you really think USA will give Argentina much besides help with IMF loans? I would like to think they will help but I hear Trump saying USA doesn't need Latin America and other talk like that. I wonder if Argentina will get much out of the relationship with Trump other than help from IMF?

I think Trump is likely posturing, I'm quite certain the US would like to take advantage of China's weakness and reduce their influence in LatAm. Unfortunately the Biden administration put $15 trillion of debt onto the US balance sheet in just 4 years, and the bond market is making noises again. So there's likely some austerity coming to the US that pushes other initiatives to the back burner. But... it wouldn't take much money to get some real momentum going in Argentina, and given Milei's relationship why not start there?

 

[Larry]

I think Trump is likely posturing, I'm quite certain the US would like to take advantage of China's weakness and reduce their influence in LatAm. Unfortunately the Biden administration put $15 trillion of debt onto the US balance sheet in just 4 years, and the bond market is making noises again. So there's likely some austerity coming to the US that pushes other initiatives to the back burner. But... it wouldn't take much money to get some real momentum going in Argentina, and given Milei's relationship why not start there?

I have my doubts. We shall see.

 

[Betsy Ross]

I think Trump is likely posturing, I'm quite certain the US would like to take advantage of China's weakness and reduce their influence in LatAm. Unfortunately the Biden administration put $15 trillion of debt onto the US balance sheet in just 4 years, and the bond market is making noises again. So there's likely some austerity coming to the US that pushes other initiatives to the back burner. But... it wouldn't take much money to get some real momentum going in Argentina, and given Milei's relationship why not start there?

People make the mistake of believing that Trump and Milei don't know what they are doing but they like to posture as Craig mentioned. The United States needs austerity measures like Argentina but I'm not sure it is possible.

 

[daveholman]

I can see the Trump Administration making a favorable trade deal with Argentina and leaving the more socialist leaning governments of South America out in the cold.

 

[Wally]

I can see the Trump Administration making a favorable trade deal with Argentina and leaving the more socialist leaning governments of South America out in the cold.

I can see this happening. It would be great to see a fall of all the leftist governments all in South America and this is as good of a shot as any to solve this.

 

[Blockchain]

From the Economist.

Is Javier Milei’s economic gamble working?

Inflation has plunged in Argentina, but some vital goods have soared in price

www.economist.com

Non paywall.

"A closer look at inflation numbers suggests that, despite smaller price rises, most Argentines are not yet better off than they were a year ago. An estimated 53% are now living in poverty, according to the Catholic University of Argentina, up from 42% in the second half of 2023. Consumer spending is down by 20% over the same period. Construction activity is 29% lower than it was a year ago. Pensioners and construction workers have been particularly hard hit: a report by the Centre for Political Economy of Argentina, a think-tank, estimates that lower pensions and public-works spending together accounted for nearly half of Mr Milei’s cuts to government spending in 2024."

 

[Avocado]

I agree! I have been saying this government has phony numbers. I think they are cooking books on inflation and salary numbers and also positive approval ratings and poverty levels. Each day I see more and more people on the streets.

The numbers are definitely not correct. Look at medical premiums and utilities and just about everything else. Our prices are the same or more than the USA now on many items. And prices will not decrease. They are still going up!

 

[Finance Prof]

The numbers are definitely not correct. Look at medical premiums and utilities and just about everything else. Our prices are the same or more than the USA now on many items. And prices will not decrease. They are still going up!

Government numbers probably always should be taken with a grain of salt. I never trust them. I agree that prices will not head down soon. It is difficult especially in Argentina for prices to go down once they go up. Peso is too strong against the dollar from intervention. The dollar needs to steadily rise. Salaries are going up but not sure how things will turn out.

I am not sure this is sustainable. Prices have gotten too expensive. My friends that usually come down to BA have cancelled their trips this year going to Europe instead because it is cheaper. Just about everything is expensive. To get to Argentina and then once you are here. Maybe the only thing that is still affordable are accommodations but everything else is expensive. Even Ubers and taxis have doubled from a short time ago.

 

[daveholman]

The numbers are definitely not correct. Look at medical premiums and utilities and just about everything else. Our prices are the same or more than the USA now on many items. And prices will not decrease. They are still going up!

I keep hearing "prices are the same or more than the USA". I'm wondering when was the last time those people bought something in the USA? From what I've seen, a few items like consumer electronics that have to be imported, are expensive.
But how many people in Argentina are paying USD1500 a month for health insurance for one person? Outside of Puerto Madero, is it even possible to pay USD3000/month for an apartment? That's the average in California now. People screaming about utilities probably don't realize USD500/month is a common electric bill here. ETC.
Yes, compared to wages, Argentina's cost of living has gone up. But it's nowhere near "as expensive as the US"

 

[CraigM]

Government numbers probably always should be taken with a grain of salt. I never trust them. I agree that prices will not head down soon. It is difficult especially in Argentina for prices to go down once they go up. Peso is too strong against the dollar from intervention. The dollar needs to steadily rise. Salaries are going up but not sure how things will turn out.

I am not sure this is sustainable. Prices have gotten too expensive. My friends that usually come down to BA have cancelled their trips this year going to Europe instead because it is cheaper. Just about everything is expensive. To get to Argentina and then once you are here. Maybe the only thing that is still affordable are accommodations but everything else is expensive. Even Ubers and taxis have doubled from a short time ago.

Interesting, do you know where in Europe? We're looking at Italy this summer and it's really expensive. I'm told restaurants are cheap outside the more touristy areas but flights are 30-50% more and accommodations 2-3x more.

I'm glad to hear that Uber prices in BA have doubled. They were absurdly cheap five months ago, almost felt like I was stealing from them.

 

[earlyretirement]

I keep hearing "prices are the same or more than the USA". I'm wondering when was the last time those people bought something in the USA? From what I've seen, a few items like consumer electronics that have to be imported, are expensive.
But how many people in Argentina are paying USD1500 a month for health insurance for one person? Outside of Puerto Madero, is it even possible to pay USD3000/month for an apartment? That's the average in California now. People screaming about utilities probably don't realize USD500/month is a common electric bill here. ETC.
Yes, compared to wages, Argentina's cost of living has gone up. But it's nowhere near "as expensive as the US"

I also hear and read same comments online and X. Actually many things here are as expensive as the USA now. I went to lunch today and burger and fries at a place in Palermo Hollywood was $23 USD for a very small burger and fries. Things like drinks, coffee, tea are about the same as the USA.

Grocery store too isn't cheap. Especially for good quality products. Not much less than the USA. Obviously, electronics are all more expensive but everyday things like toilet paper, paper towels, cleaning supplies, etc. are about the same now. I am getting cleaning supplies for 2 of my new apartments and a mop that I can get on Amazon.com for $50 is about $100 USD here.

Healthcare costs keep going up but less than the USA but not by the big differences like before. I am paying for employees with a mid-tier OSDE 310 plan and one adult and one child is about $550 USD per month. In the USA for my 3 kids and my wife and I, I pay a out $2,700 USD per month for a PPO plan. Here now I think that would be about $2,000 here for a comparable plan.

Utilities are still much cheaper than the USA in most places but they have jumped up a lot. I'm paying almost $400 USD for a one bedroom HOA fees in Palermo Hollywood. Probably in San Diego the same thing would be $800 USD so double.

You can still get inexpensive food but even on Rappi, very mediocre quality steaks are about $30 USD here for small portions. Beef prices have really gone up.

Obviously it's not as expensive as the USA on many items but BA isn't cheap anymore. I don't think it's healthy to have the peso so strong so soon. An exchange rate of at least 1,600 to $1 USD would be healthier, IMHO.

Interesting, do you know where in Europe? We're looking at Italy this summer and it's really expensive. I'm told restaurants are cheap outside the more touristy areas but flights are 30-50% more and accommodations 2-3x more.

I'm glad to hear that Uber prices in BA have doubled. They were absurdly cheap five months ago, almost felt like I was stealing from them.

Accommodations are still very reasonable in BA and so are rents compared to the USA. @CraigM, where you thinking about in Italy? We are also planning a trip to Italy or maybe Spain or both this summer. Keep me posted as if you're also there maybe we can synch up. We are going to London/Paris next month to look at colleges for my daughter but my wife wants to go back to Europe for the summer. Accomodations are definitely more expensive in Europe vs. BA.

I agree about the Ubers. They were crazy cheap but they have come up. So have taxis. When it is so low I typically over tip. I know locals hate that but I always feel good doing it to help them out.

 

[CraigM]

Accommodations are still very reasonable in BA and so are rents compared to the USA. @CraigM, where you thinking about in Italy? We are also planning a trip to Italy or maybe Spain or both this summer. Keep me posted as if you're also there maybe we can synch up. We are going to London/Paris next month to look at colleges for my daughter but my wife wants to go back to Europe for the summer. Accomodations are definitely more expensive in Europe vs. BA.

I agree about the Ubers. They were crazy cheap but they have come up. So have taxis. When it is so low I typically over tip. I know locals hate that but I always feel good doing it to help them out.

That's awesome Mike, I'll PM you about Italy.

 

[enbits]

The whole world got expensive, I posted today about this. I've been doing grocery shopping on several countries lately and everything is expensive everywhere. AirBnb / Rent prices went up between 50 / 100% compared to pre COVID.

 

[Uncle Wong]

The whole world got expensive, I posted today about this. I've been doing grocery shopping on several countries lately and everything is expensive everywhere. AirBnb / Rent prices went up between 50 / 100% compared to pre COVID.

Same thing I noticed @enbits . I'm not sure about Asia. I haven't been there in a while. Does anyone know? @Jakoval I think you said you are from Thailand? Have things like food gone up there too and experienced bad inflation?

 

[Jakoval]

Same thing I noticed @enbits . I'm not sure about Asia. I haven't been there in a while. Does anyone know? @Jakoval I think you said you are from Thailand? Have things like food gone up there too and experienced bad inflation?

Things were more expensive for sure pretty much everywhere but in Thailand it's still manageable, depending on where you shop. I came across this video of a couple of Americans doing their grocery shopping in Bangkok. I'm not sure where they shopped but it looks like a mid to high end supermarket so if you go to a cheaper store, you could get a lot more for what they got in the video.

Tim & Abbey Allen on Instagram: "What could you buy with $145 for groceries?? 🛒 I love being able to afford groceries in Thailand! 🇹🇭 #livingabroad #lifeabroad #livinginthailand #lifeinthailand #expat #expatlife #groceryhaul"

613 likes, 60 comments - livinglifeonpurpose__ on January 24, 2025: "What could you buy with $145 for groceries?? 🛒 I love being able to afford groceries in Thailand! 🇹🇭 #livingabroad #lifeabroad #livinginthailand #lifeinthailand #expat #expatlife #groceryhaul".

www.instagram.com

 

[Betsy Ross]

Things were more expensive for sure pretty much everywhere but in Thailand it's still manageable, depending on where you shop. I came across this video of a couple of Americans doing their grocery shopping in Bangkok. I'm not sure where they shopped but it looks like a mid to high end supermarket so if you go to a cheaper store, you could get a lot more for what they got in the video.

Tim & Abbey Allen on Instagram: "What could you buy with $145 for groceries?? 🛒 I love being able to afford groceries in Thailand! 🇹🇭 #livingabroad #lifeabroad #livinginthailand #lifeinthailand #expat #expatlife #groceryhaul"

613 likes, 60 comments - livinglifeonpurpose__ on January 24, 2025: "What could you buy with $145 for groceries?? 🛒 I love being able to afford groceries in Thailand! 🇹🇭 #livingabroad #lifeabroad #livinginthailand #lifeinthailand #expat #expatlife #groceryhaul".

www.instagram.com

Still looks very affordable. I will try to go to Asia later this year. My sister showed me what little $100 dollars buys in California. She just had 2 small plastic bags of stuff at Whole Foods.