Argentina Expected Inflation

Inflation expectations collapsed from crisis levels, but the latest data points to some re-acceleration

Expected inflation over the next 12 months, as measured by the REM survey, is an important forward-looking indicator of Argentina’s nominal regime. Unlike realized inflation, this series reflects how analysts and market participants interpret the likely persistence of price pressures ahead. For that reason, it is especially useful for evaluating credibility, the perceived durability of disinflation, and the market’s confidence in stabilization.

From already high levels to a full expectations breakdown

In 2020 and 2021, expected inflation was already running at high levels, mostly in the 40%–55% range. That alone signaled that inflation was not seen as a temporary disturbance, but as an entrenched macroeconomic condition. Expectations were elevated even before the later crisis phase, indicating that the nominal anchor had already weakened materially.

During 2022, expectations deteriorated further and moved decisively into a more unstable regime. The series rose from the low-50s to near 100% by late 2022, showing that forecasters increasingly expected inflation to accelerate rather than stabilize. At that stage, inflation expectations had become progressively less anchored and more sensitive to exchange-rate pressure, fiscal uncertainty, and broader policy inconsistency.

Extreme deterioration in 2023

The most severe phase came in 2023, when expected inflation surged to exceptionally high levels. After moving above 100% early in the year, the series accelerated sharply and eventually climbed above 200%, with a peak near the end of the year. This was not just an inflation problem in the conventional sense; it was a clear sign of deep nominal dislocation, in which economic agents had very limited confidence that inflation would be brought under control over the following year.

When 12-month-ahead inflation expectations move above 200%, the informational content is powerful: agents are no longer projecting merely high inflation, but a macroeconomic environment in which price-setting, contract formation, and portfolio decisions are being dominated by defensive behavior. In practical terms, that kind of expectations regime is consistent with a near-collapse in monetary and policy credibility.

Sharp normalization through 2024

Starting in 2024, the series turned decisively downward. Inflation expectations fell from above 180% in January 2024 to below 30% by the end of the year. That decline was extremely significant because expectations typically adjust more slowly than spot inflation. A move of that scale indicates that market participants were reassessing the inflation outlook in response to tighter macroeconomic discipline, a stronger policy signal, and a reduced perception of immediate nominal disorder.

This phase represented a genuine re-anchoring attempt. Even though expectations remained high in absolute terms by international standards, the change in direction was profound. The market was no longer extrapolating a crisis spiral; instead, it was beginning to price a scenario of continued disinflation over the subsequent 12 months.

Relative stability in 2025, followed by a mild rebound in early 2026

During most of 2025, expected inflation stabilized in a much lower band, roughly around 20%–26%. That was a major improvement relative to the previous two years and suggested that disinflation had moved beyond the initial collapse from extreme levels into a more mature phase of adjustment. In other words, the market had shifted from fearing explosive inflation to debating how low inflation could realistically go.

However, the latest observations show that the process has become less one-directional. After reaching 20.1% in December 2025, expected inflation moved back up to 21.0% in January 2026, 22.3% in February, and 23.8% in March. That does not undo the broader improvement, but it does suggest that the next stage of disinflation may be slower, more uneven, and more vulnerable to policy noise or relative-price adjustments than the previous phase.

Current interpretation

The key message from the current level is that expectations are still far below the crisis readings of 2023–2024, which is clearly positive. At the same time, the recent rebound matters because expectations are forward-looking: when they stop falling and begin to edge higher, that can be an early sign that the market sees less room for rapid additional disinflation.

Put differently, Argentina appears to have exited the extreme expectations regime, but has not yet reached a fully comfortable or fully anchored nominal equilibrium. The remaining challenge is no longer simply to reduce inflation from catastrophic levels; it is to maintain enough policy consistency and credibility to keep expectations from stabilizing at a still-elevated plateau.

Conclusion

REM inflation expectations over the next 12 months have improved enormously compared with the breakdown phase of 2023 and early 2024. That alone marks a substantial macroeconomic gain and shows that the stabilization process has had real forward-looking effects.

Still, the rise in the first months of 2026 is a reminder that disinflation credibility must be constantly renewed. The main question now is no longer whether the crisis peak is over, but whether expectations can continue trending lower without renewed interruptions.