BUENOS AIRES, Argentina — Fresh economic data released Thursday has delivered a rare glimmer of good news for Argentine President Javier Milei, as the country’s inflation rate cooled for the second straight month in May, following nearly a year of unrelenting price hikes that threatened to erode the libertarian leader’s core policy progress.
Government statistics agency INDEC reported that consumer prices climbed 2.1% in May compared to April, a figure that Economy Minister Luis Caputo celebrated as the lowest monthly inflation rate recorded in eight months. However, the annual inflation rate ticked upward slightly to 33.2% this May, a statistical shift driven by an unusually low 1.5% monthly inflation reading in May 2025, which marked a seven-year low at the time.
Since that 2025 low, prices have remained persistently high, squeezing household budgets across the country and stoking widespread public discontent with Milei’s administration. The government is already grappling with overlapping crises: a string of high-profile corruption scandals, and a deep economic downturn hitting labor-heavy sectors including retail and manufacturing.
Breaking down May’s price movements, communications services saw the steepest increase at 3.4%, driven by rising phone and internet bills. Education costs followed close behind, while food prices accelerated 2.5% year-over-year, continuing to put pressure on low- and middle-income households.
Beyond the inflation data, the Milei administration secured another vote of confidence from global markets this week: major credit ratings agency S&P Global announced late Wednesday it had upgraded Argentina’s sovereign credit rating to stable B-, up from the CCC tier widely considered to signal high risk of sovereign default. The upgrade cited the government’s consistent track record of meeting debt repayment obligations.
Milei publicly celebrated the dual wins on social media, sharing the INDEC inflation report and praising Caputo — who goes by the nickname “Toto” — with the enthusiastic comment, “Let’s goooooo Toto!”
While the credit upgrade still leaves Argentina well below investment grade status, it marks a key step forward for Milei’s long-term policy goal of restoring the crisis-prone Argentine economy’s access to global capital markets. It has been six years since Argentina defaulted on its foreign debt for the ninth time in the country’s modern history.
Milei took office in late 2023 on a promise to crush Argentina’s long-running sky-high inflation and reverse decades of chronic fiscal deficits. More than two years into his term, his sweeping austerity and deregulation agenda has delivered tangible progress: the country has posted a rare budget surplus, won over skeptical international investors, and brought annual inflation down from the 200% peak it hit when he first took office to the current 33% reading.
Yet significant headwinds remain that threaten to undermine Milei’s agenda. Even with slowing inflation, the cost of living in the capital Buenos Aires is now comparable to major European capitals, and price growth continues to outpace real wage gains for most workers. Unemployment has crept upward as thousands of workers have been laid off from domestic industries that cannot compete with a flood of cheap imported goods.
Compounding economic pressures, corruption scandals — which Milei vowed to eliminate when he campaigned for office — have eroded public support even as the administration cuts funding for core public services including education, health care and social assistance.
The most recent controversy involves Milei’s top aide and cabinet chief Manuel Adorni, who is currently under investigation for alleged illicit enrichment. Investigators are probing Adorni’s lavish travel, including an all-cash luxury trip to Aruba, and high-value real estate purchases that appear out of line with his modest public salary. On Wednesday, Adorni admitted to hiding $500,000 in undeclared savings and unreported cryptocurrency investments, deepening the political scandal.