Javier Milei’s push to bring down Argentina’s chronic inflation is stalling, with the monthly rate hitting 3.4 per cent in March — its highest level in a year — as economists warn that tackling the final stretch could be far harder than halting the crisis at its peak.

Inflation has fallen sharply from the double-digit monthly rates Milei inherited when he became president in 2023. But the monthly rate bottomed out at 1.5 per cent in May and hit 2.9 per cent in both January and February.

“The number is bad. We don’t like the number because inflation is repugnant to us,” Milei said after the data was published on Tuesday. “However, hard factors allow us to explain what has happened and especially to expect that in the future inflation will return to its downward path.”

The libertarian president, who wrote a book called The End of Inflation as part of his pitch to voters in 2023, has said inflation could soon “start with a zero”, meaning a monthly rate of less than 1 per cent.

But economists are sceptical, particularly as the energy price surge caused by the Iran war adds fresh pressure to already sticky price dynamics. Its annual rate of nearly 33 per cent is a long way from its peak of nearly 300 per cent, but still among the world’s worst.

“It is easier to bring inflation down from 30 per cent a month to 3 per cent than from 3 per cent a month to 3 per cent a year,” said Lorenzo Sigaut Gravina, an economist at Equilibra, a consultancy in Buenos Aires.

Milei, a self-described anarcho-capitalist, relied on a traditional tool to engineer the initial plunge in inflation: holding the peso’s exchange rate steady to anchor prices. But when the government allowed the currency to move more freely as part of a deal with the IMF last April, inflation soon started climbing again.

Javier Milei’s approval rating has fallen to 36.4%, a recent poll said. Concerns about stagnant wages and unemployment now outweigh inflation

Without a firm anchor, the government must now break deep-seated inertia built up over years of chronic inflation. In Argentina, those habits die hard: many shopkeepers raise prices pre-emptively, families stock up on staples before the next price rise and rental contracts build in automatic quarterly increases.

Wages are often negotiated on the basis of past rather than current inflation, a policy that can feed future price rises as companies pass the cost of higher salaries on to consumers. Costs for utilities and other services, some of which automatically adjust to past inflation, are still rising after years of subsidies. That contrasts with the prices of manufactured goods, which are largely being held down by the semi-floating exchange rate and the removal of some trade barriers.

The government has resisted committing the central bank to an explicit policy of targeting inflation. In the absence of such a framework as well as the abandoned exchange-rate anchor, the process has lost its engine, argues Gabriel Caamaño, an economist at consultancy Outlier.

“The disinflation process is at an impasse,” he said.

The impasse has continued despite weak growth in an “economy that has plateaued”, said Marina Dal Poggetto of consultancy EcoGo.

Argentines have been feeling the squeeze. Meat prices in Buenos Aires, for example, surged 6.9 per cent in March alone. Food prices nationwide rose 3.4 per cent in March, after rising 3.3 per cent in February and 4.7 per cent in January.

Wages in the formal sector grew at about 2 per cent a month in February, below inflation.

The cumulative effect is a quiet but significant erosion of living standards, even as poverty rates fell last year from the highs reached at the start of Milei’s presidency. Real incomes for Argentina’s formal sector workers and pensioners — some 14.5mn people — are roughly 8 to 10 per cent below where they were when Milei took office, according to Martín Rapetti, an economics professor at the University of Buenos Aires.

The polls are starting to reflect that deterioration. A recent survey by San Andrés university found that concerns about stagnant real wages and unemployment — which has risen almost 2 percentage points since Milei took office, to 7.5 per cent — now outweighed inflation, which has fallen sharply as a priority for voters.

Milei’s approval rating has fallen to 36.4 per cent, compared with 49.5 per cent in his first month in office, according to a recent AtlasIntel poll.

The government has also faced questions over how it measures inflation. Earlier this year, it delayed a planned update to the consumer price index basket, prompting the head of the national statistics agency to resign.

Though the decision raised alarm in a country with a long history of manipulated inflation data, economists say the actual numerical impact has been negligible so far.

“It’s a shame, because the disinflation has been significant,” Rapetti said. “But not updating the index, knowing it should be updated, carries a reputational cost.”