According to INDEC's National Consumer Price Index (IPC), Argentina's accumulated inflation in the first half of 2023 reached 50.7% — the highest six-month accumulation recorded since 1990, when the country was still emerging from the hyperinflationary crisis of 1989. This figure marks a qualitative escalation in what had already been one of the world's highest sustained inflation rates: in 2022, annual inflation had closed at 94.8%, itself a three-decade record. Monthly inflation averaged 8.4% across the January-June 2023 period, with individual months ranging from 6.0% in June to higher readings earlier in the year. Our dashboard on inflation and relative prices tracks the monthly evolution of the CPI and its main components in detail.
Which categories drove prices higher
Price increases in the first half of 2023 were widespread across virtually all categories but showed important variation in intensity. Food and non-alcoholic beverages — the single most important component of the CPI basket in terms of household budget share — rose 57.3% in H1, outpacing the overall index. Clothing and footwear posted the highest sectoral increase at 68.1%, reflecting both the import-intensive nature of this category and the pass-through of foreign exchange restrictions into retail prices. Core inflation — which excludes regulated prices and seasonal items and is considered the best measure of underlying price momentum — exceeded a 100% annual rate by June 2023, indicating that inflationary pressures were deeply embedded in the economy rather than confined to volatile categories.
The August shock: post-PASO devaluation
The publication of this analysis coincides with one of the most significant single-event price shocks in recent Argentine economic history. Following the primary election results of August 13, 2023 (the PASO), the government announced an immediate devaluation of the official exchange rate from approximately $269 to $350 per US dollar — a 30% adjustment in a single day. This step-devaluation, the largest in nominal terms since 2019, fed immediately into import costs and expectations, triggering price increases across a broad range of goods within days. The event underscored how the exchange rate — and specifically the management of Argentina's multiple exchange rate system — functions as a direct driver of consumer prices in an economy where many inputs are priced in dollars even when the final product is sold domestically.
Real wages and the purchasing power squeeze
Inflation at these rates invariably erodes the real purchasing power of wages. INDEC's wage index for the private formal sector showed real wages declining approximately 5.2% in the first half of 2023, meaning that even workers who received nominal wage increases found that their salaries bought fewer goods and services than they had at the start of the year. The erosion was not uniform: workers in sectors with stronger collective bargaining — such as banking, oil, and some industrial unions — managed to negotiate increases closer to inflation, while workers in sectors with weaker bargaining power or in informal employment fell further behind. Our dashboard on employment and wages tracks real wage trends across formal and informal sectors.
Distributional impacts and the poorest households
High inflation is never neutral in its distributional effects. In Argentina's context, the households most severely affected were those in the lowest income quintile, for whom food and beverages represent more than 40% of total spending. When food prices rise faster than the overall index — as they did in H1 2023 — poorer households experience an effective inflation rate significantly higher than the published headline figure. This phenomenon, known as regressive inflation, compounds the difficulties faced by those relying on social transfers or informal incomes that adjust slowly to price increases. The data from the first half of 2023 illustrate how an inflationary environment at this intensity functions not just as an economic inconvenience but as an active mechanism for redistribution of real income from lower to higher-income groups.
