Argentina Government Cheers Falling Prices While Utility Bills Soar

ARGENTINA · ECONOMY

Argentina’s economy minister told business leaders that trade opening has made many goods cheaper for households. The fuller picture, including the items he did not dwell on, shows where the squeeze on family budgets has shifted.

What the minister highlighted

Speaking to the Argentine-Brazilian Chamber of Commerce, Economy Minister Luis Caputo argued that a modest opening of trade has widened the range of products available and pushed some prices down in real terms. Reading from a chart covering November 2023 to May 2026, he said footwear had fallen 30%, apparel 36%, home equipment and maintenance 22%, and vehicles 12.8%. Medicines were down by less than 10%, he said, and the basic food basket by 9.6%.

The figures are measured against inflation, so they describe relative declines rather than falling sticker prices. Caputo presented them as evidence that competition is producing, in his words, a more favorable situation for Argentines, even as foreign trade still amounts to only about 30% of the economy, far below the 90% he said he considers ideal.

The utility bills he left out

The same presentation showed sharp increases elsewhere that the minister did not emphasize. Public utility tariffs, electricity, gas and other fuels, rose more than 112% over the period. Transport climbed about 80%, pressured by higher fuel costs tied to conflict in the Middle East. Education rose 26%, a figure Caputo did mention.

On utilities, he said most people who need a subsidy have one and still pay a low share of the full tariff, framing the increases as a correction aimed at users who can afford to pay more. The selective emphasis, declines highlighted and the largest increases passed over quickly, is what gives the government’s account its optimistic cast.

Inflation still high, and contested

Headline inflation slowed to 2.6% in April and 32.4% over twelve months, and Caputo said May would come in below the April figure. But the disinflation is incomplete, and the official measure is itself disputed. A public-opinion monitor cited locally found that seven in ten Argentines do not believe the national statistics agency’s index reflects the price changes they experience, and more than eight in ten say their salary is not beating inflation.

That gap, between the official trajectory and how households feel, is the political fault line. Argentines increasingly judge the economy not only by the speed of price rises but by whether their purchasing power is recovering, and on that measure the data are far less flattering than the chart the minister chose to read.

The subsidy maneuver behind the numbers

To moderate price pressures in the coming months, the economic team has leaned on subsidies. The energy secretariat extended an extra 25% discount on June gas bills for lower-income residential users, keeping their total subsidy at 75%, and set an extra electricity discount that lifted the subsidy to 62% of base consumption.

Those are deliberate choices to spend more on subsidies to aid disinflation, even at some risk to the fiscal surplus at a time when tax revenue has been weak. It is a reminder that part of the slowdown in measured inflation is being purchased with public money rather than driven solely by market competition.