Argentina construction inflation keeps soaring

Inflation in Argentina’s construction sector has soared since President Javier Milei took office in December and devalued the peso 50% in one of his first shock measures to fix the beleaguered economy.

In greater Buenos Aires, which encompasses the federal capital and 24 surrounding municipalities, sector inflation reached 30.1% in December, compared to 11.3% in November, according to the latest figures by statistics agency Indec.

Annual sector inflation in the area reached 223%.

Monthly prices for construction materials jumped 48.3%, with iron supplies rising 104% and electric appliances 83.2%. Labor costs increased 9.9% and general expenses 21.3%.

Right after taking office on December 10, President Javier Milei ordered a 54% devaluation of the local currency as part of efforts to lift government controls on forex markets.

Construction firms had complained that varying exchange rates, with one for official transactions and another in the informal market, caused problems for imports, as obtaining US dollars through official channels was slow and caused delays and additional overhead costs.

However, these firms have also criticized Milei’s proposal to reduce public infrastructure investment to a bare minimum, claiming the move could cost tens of thousands of jobs.

PROVINCIAL FIGURES

In Mendoza, material costs rose 44.3% in December, compared to 22.4% in November, according to local association Red Edificar. Annual sector inflation was nearly 355%.

Córdoba reported a 20.6% rise and annual sector inflation of 191%, although the province’s statistics office uses a different formula than Indec.

Santa Fe has not yet released sector figures, but the general price index increased 27.9% month-on-month in December, while annual inflation reached 215%.