The Argentine peso slid 6.5% against the dollar in June, its largest monthly loss since the currency turmoil that preceded the 2025 elections. A strengthening dollar globally and a 6% depreciation of the Brazilian real amplified local strains, but technical factors also played an outsized role. The central bank, barred by its own rules from selling dollars in the spot market until the peso weakens to the band’s ceiling, shifted its intervention from open positions in futures contracts to selling dollar-linked bonds. The aim, Buenos Aires market participants note, is not to halt the nominal depreciation but to soften its trajectory and limit the pass-through to domestic prices.

That pass-through remains the chief risk for the government’s disinflation programme. The peso move came just as private-sector wages recorded their first real monthly gain since August 2024, with April salaries rising 1.4% in real terms. Yet the improvement is being eroded by utility costs that have surged since President Milei took office. According to Fundación Capital, public services in metropolitan Buenos Aires now absorb 10.8% of the average wage, nearly double the 4.3% of late 2023. For a low-income household on two minimum salaries, that share reaches 22%. The squeeze helps explain why the nominal rise in pay packets has not fed through to a strong recovery in mass consumption.

Beneath the top-line wage figure, the labour market is fragmenting. Formal private employment has fallen by 216,000 positions since the start of the administration, while informality has risen to 44.2% of the occupied workforce. The minimum wage has lost almost 40% of its real value. At the same time, energy, mining and knowledge services are expanding, creating what one consultancy calls a ‘dual economy’ where growth coexists with harsher conditions for traditional industry and construction. Orlando Ferreres, a former deputy economy minister and intellectual mentor to Milei, told local radio that the lack of a genuine investment climate – with businesses awaiting clarity on whether the economic model will survive the 2027 elections – is the biggest obstacle to more inclusive growth.

Ferreres and Alberto Ades, a Wall Street-based economist close to the administration, have both drawn historical parallels with the ‘tablita’ of the late 1970s, when a pre-announced crawling peg encouraged dollar inflows that later ended in a disruptive devaluation. Ferreres argues that savers are already buying dollars because they perceive the peso as cheap, setting up a slow-burn dollarisation process. The key variable, he contends, is political: ‘If there is confidence that the government will continue, we are saved. And if not, there is a problem.’ In Brazil, a different wobble appeared: industrial output unexpectedly fell 0.2% in May, the first decline after four consecutive increases, though the IBGE described it as a temporary adjustment. Personal finance commentary from Indonesia, Spain and Mexico this week urged households to build emergency savings and resist lifestyle inflation, a sign that the gap between wage gains and living costs is a global concern.