Argentina Braces for First Poverty Rise Under Milei as Election Looms

Argentina's national statistics agency, INDEC, is set to release poverty figures for the first half of 2026 on Thursday, with private estimates pointing to the first increase since President Javier Milei took office and brought inflation under control.

Estimates from the Catholic University of Argentina (UCA), widely viewed as an early indicator of official trends, suggest the poverty rate could climb to 35% of the population by the end of the year. That would reverse part of a steep decline that brought the rate down to 28% in 2025, marking a setback for Milei little more than a year before the next presidential election.

Agustín Salvia, who directs UCA's Argentine Social Debt Observatory, said 400,000 to 450,000 people have fallen into poverty in each of the last four quarters. He put the current rate at between 31% and 32%.

Even if confirmed, the increase would leave poverty well below levels seen during Milei's first year in office. But analysts warn it could signal that social gains from slowing inflation are losing momentum, with further progress increasingly dependent on stronger job creation and real wage growth.

"A modest increase in poverty would not undo the large decline seen under Milei, but it would suggest that the easier part of the improvement has run its course," said Nicholas Watson, managing director for Latin America at consultancy Teneo.

Strains on the ground

Social organizations and aid workers say more Argentines are struggling to make ends meet. In a community hall on the outskirts of Buenos Aires, teacher Ana Barreto helps run a barter club launched in August in Villa Astolfi, reviving a practice associated with past economic crises. Residents exchange goods instead of cash, with cooking oil, sugar, flour and pasta among the most sought-after items, often traded for used clothing and household goods.

"Poverty has deepened dramatically," Barreto said.

At another barter club set up two years ago, Melany Malén Borré said many feel frustrated that improvements in their living standards have not materialized. "I think the people who voted for Milei were expecting progress that never came," she said.

Gustavo Raúl Pérez, who owns a hardware store in San Fernando, north of Buenos Aires, said his business has suffered as customers cut back. "Four years ago I had lines of customers. I used to sell 10 wheelbarrows, now I sell one," he said, adding that he voted for Milei hoping for change but has been disappointed.

Support eroding among poorer voters

Rising hardship appears to be damaging Milei's standing among lower-income voters as he moves toward a likely reelection bid in 2027. A September AtlasIntel survey found disapproval among lower-income respondents — defined as those earning up to around $650 a month — had climbed to nearly 70%, while approval fell below 30%. A year earlier, those figures stood at 57% and 37%. Nationally, 58% disapproved of Milei while 38.1% approved.

Unemployment rose to 7.9% in the second quarter of this year, up from 7.6% a year earlier. Private-sector employment has declined for 13 straight months, and the recovery in household incomes has largely stalled, according to Watson.

Cuts to public-sector pay, the removal of transport and utility subsidies, and relaxed import rules have squeezed households and pressured some domestically focused industries. The government says the austerity drive is needed to restore stability by eliminating chronic budget deficits that contributed to repeated economic crises and high inflation. It argues that balancing the budget and delivering a fiscal surplus will bolster public finances, reassure investors and create conditions for sustainable growth.

A government spokesperson said Milei will not deviate from his program. "The president is not going to move one inch from his program. He is not going to loosen his (contractionary) monetary policy to win elections," the spokesperson said. His administration has refused to increase public spending or renew subsidies, measures often used in election years, arguing they would jeopardize efforts to tame inflation and maintain fiscal discipline.