Argentina inflation falls in May for fifth straight month

FILE PHOTO: Constumers check products at a wholesaler,as Argentina is due to release consumer inflation data for April, in Buenos Aires

By Miguel Lo Bianco

BUENOS AIRES (Reuters) - Argentina's monthly inflation rate in May was the lowest since 2022, official data showed on Thursday, cooling for the fifth straight month to 4.2% amid a tough austerity drive by libertarian President Javier Milei.

The month-on-month rise in prices was Argentina's smallest since the start of 2022, below forecasts of a 4.9% increase and down from a peak over 25% in December.

Annual inflation also slowed for the first time since the middle of last year, coming down off an April peak to clock in at 276.4%, still among the highest rates in the world.

Many Argentines say they have yet to feel the benefit of slowing inflation, with sky-high food, utilities, and transportation costs making the minimum monthly wage in Argentina of 234,315 pesos ($260) feel insufficient.

"I still don't understand how inflation can be going down," said Silvia Castro, a 65-year-old retiree shopping for her groceries at a market on the outskirts of Buenos Aires.

"Taxes are very expensive, services and gasoline are expensive, insurance is expensive, the social work (health service) that was meant to go down is the same or has risen."

Thursday's inflation data is likely to fuel bets that Argentina's central bank will continue cutting the country's benchmark interest rate.

The monetary authority has brought the rate down from 133% in December to the still steep rate of 40%.

Argentina's government has touted its success taming inflation with tough measures to reduce central bank money printing, focus on rebuilding reserves and cut spending.

Markets cheered Thursday after the Senate passed a sprawling reform package overnight that is key to President Milei's economic agenda, with Argentina's bonds and beleaguered currency rallying.

Still, Milei's government faces a challenge to keep voters on-side with the economy stalling and poverty levels rising.

Laura Basualdo, a 53-year-old merchant, said many people were struggling to buy things as their earning power had been eroded by constantly high inflation.

"I'm a merchant and I often see the customer on the other side who, clearly, if my prices don't work for them, they go out to look for other offers," she said.

"We all have to shop around today. It's terrible, constantly the money in our pockets gets lighter, less and less each time. Nowadays it feels like eating is a luxury."

(Reporting by Miguel Lo Bianco; Writing by Lucila Sigal; Editing by Sandra Maler and Chizu Nomiyama)