The Thermometer War: Why Argentina’s Inflation Numbers Just Became a Political Battleground

Argentina pulled off something extraordinary: it took the worst inflation on Earth — 211% when Javier Milei took office in late 2023 — and wrestled it down to 31% in two years, posting the first budget surplus in 14 years. Then last week, the people whose job is to forecast this economy said: it is not falling fast enough anymore. This is part of The Rio Times’ daily coverage of Argentina affairs and Latin American financial news.

The January REM survey — 33 consultancies and 12 banks polled between January 28 and 30 — pegged 2026 inflation at 22.4%, up 2.3 points from December and more than double the government’s 10.4% target. The best forecasters expect 24.5%.

Milei promised prices will “start with zero” by August. Nobody in the survey believes that. GDP growth was trimmed to 3.2%, and the peso is expected at 1,750 per dollar by December — far weaker than the budget’s 1,423 assumption.

Behind the numbers sits a credibility fight. On February 2, INDEC director Marco Lavagna resigned after Economy Minister Caputo blocked an update to the inflation index. Argentina still calculates prices using a 2004 consumer basket that includes fax machines and VHS tapes.

A replacement reflecting actual spending today — giving more weight to utilities and transport, which surged after Milei slashed subsidies — was ready. Caputo shelved it until disinflation is “consolidated.”

Inflation credibility tests Milei’s momentum

The central bank itself admitted the new method would have shown higher inflation. The precedent is toxic: INDEC was politically intervened from 2007 to 2015 under the Kirchners, who systematically faked inflation downward for years.

The paradox is that Milei has never been stronger. His party won October’s midterms with 41%, Trump provided a $20 billion credit line — since repaid — and this week both countries signed a sweeping trade deal. UNICEF says 1.7 million children escaped poverty on his watch.

Supporters call it the most dramatic disinflation in modern history, without price controls. Critics counter that the poverty spike to 53% was the worst in two decades, 45% of workers remain informal, and foreign direct investment went negative in 2025 for the first time since 2003.

With $20 billion in debt due this year and reserves dangerously thin, the question is whether Milei can close the gap between promise and reality — in a country that has defaulted nine times since independence.

Related coverage: Brazil’s Morning Call | Argentina’s Merval Plunges 9.6% in Seven Sessions as INDEC C