Recently critics of Argentina’s new president, Javier Milei, have accused him of unleashing unbearable inflation upon his citizens, ostensibly undercutting the image of the darling of libertarians and fiscal hawks. But as I’ll demonstrate in this article, the accusations are based on misleading statistics. Specifically, if you look at Argentine inflation rates over the past twelve months—which crucially includes the tail end of the previous administration—then they are indeed awful. But an analysis of the monthly rates of price inflation show that it has improved dramatically under Milei’s tenure.
She was not the only one to level such an accusation against Milei, but a good example of the criticism is the following tweet from progressive economist Isabella Weber:
As of this writing, Weber’s tweet has over half a million views, and more than 3k “hearts.” It clearly resonated in the progressive neighborhoods of X.
The only problem is, her claim that under Milei, “inflation shot up to ~300%” is incredibly misleading. Before I show the underlying data, let me first go through a hypothetical example involving weight.
Suppose a man starts out with a consistent weight of 150 lbs., but then in the second half of 2023 goes through a personal tragedy and begins rapidly gaining weight. As many people do, by the time New Year’s Eve rolls around, he decides he is going to turn his life around and get serious about his diet and exercise. The following fall, the man reviews his progress. Specifically, he has recorded his weight as of the 1st day of each month. Here is what his records indicate:
If we look at the middle column—which shows how much the weight changed from the prior month—it is clear that the man definitely had a significant improvement at the turn of the year. As the green cell indicates, his monthly gain had been steadily increasing in late 2023 and peaked at 50 lbs. during December 2023 (because the weight on January 1, 2024 was 50 lbs. higher than it had been on the Dec. 1 weigh-in). After the New Year, the monthly weight gain collapsed, with the man roughly treading water (i.e. remaining at a constant weight) in the last three months on record. Therefore, if we look at the monthly changes in weight, it is obvious that the man’s diet and exercise regimen was certainly much better in 2024 than it had been in the latter half of 2023.
In contrast, what if we only looked at the 12-month changes in weight, or what is sometimes called year-over-year changes? Those are indicated in the final column on the right. Using this statistic, we might erroneously conclude that the man’s alarming weight gain continued to worsen up until the summer of 2024, and that as of the most recent measurement, it was still showing an alarming 167-pound increase, which would clearly spell death if this trend persisted.
Yet such a conclusion would be silly. The year-over-year gain of 167 pounds as of September 1, 2024 is not “wrong,” but it is very misleading in this example. The man put on most of the new weight in the tail end of 2023, as the monthly figures indicate. The startlingly high year-over-year figures have a lag in recognizing the change in diet and exercise, simply because—by construction—they lump together everything from the prior 12 months, thus masking any major shift that occurred during that period.
The reader can surely see where this is going. Even though Argentina continues to post dangerously large (consumer price) inflation readings measured on a year-over-year basis, these figures are driven by the enormous surge in inflation in the tail of 2023. Javier Milei wasn’t even sworn in until mid-December of 2023, and so clearly none of these monthly figures are his fault.
The following chart shows the monthly increases in Argentina’s consumer price index:
And from UFM we have this useful graph, clearly showing the pre-Milei period:
Now to be sure, a monthly rate of consumer price inflation of 4.2 percent is still unacceptably high—it translates into an annualized CPI inflation rate above 60 percent. However, as the above charts make crystal clear, Milei has made enormous progress on the inflation rate, given the mess that he inherited. In particular, it is absurd for Weber and other critics to claim that inflation “shot up” under Milei, as these statements purely reflect a misleading unit of measurement.
Dr. Robert P. Murphy is the Chief Economist at infineo, bridging together Whole Life insurance policies and digital blockchain-based issuance.
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