BUENOS AIRES, June 5, 2025 (Reuters) — Argentina's poverty rate climbed to 54.3% in the second quarter of 2025, the national statistics agency INDEC reported Thursday, the highest level since the 2001-2002 economic crisis and a sharp increase from 41.7% when President Javier Milei took office 18 months ago.

The figure, based on a nationwide household survey conducted in April and May covering 31,000 urban households, showed that approximately 25.4 million Argentines now live below the poverty line, defined as an income of roughly 189,000 pesos ($208) per month for a family of four. Child poverty reached 62.1%, meaning nearly two-thirds of Argentine children under 14 live in poor households.

The release came on the same day that INDEC separately reported monthly inflation of 1.8% for May — the lowest since October 2017 and down from 25.5% in December 2023. The juxtaposition of collapsing inflation and rising poverty has become the defining paradox of Milei's presidency, one that economists say reflects the brutal arithmetic of austerity-led stabilization.

"This is the human cost of stopping hyperinflation," said Economy Minister Luis Caputo at a hastily arranged press conference in the Economy Ministry building. "There is no painless way to correct 20 years of fiscal irresponsibility. But the alternative — continuing the money printing that destroyed savings and wages — was far worse. We chose the difficult path because the easy path led to ruin."

The poverty surge has been driven by three factors, economists said: the elimination of energy and transport subsidies that had buffered low-income households, a 15% real-term contraction in public sector wages over 18 months, and a collapse in informal-sector employment as austerity reduced consumer demand. The Universal Child Allowance (AUH), which serves 4.2 million families, was maintained in nominal terms but lost roughly 28% of its purchasing power before indexing was restored in March.

In the Buenos Aires suburb of La Matanza, one of Argentina's poorest municipalities with a poverty rate above 65%, residents said the statistics matched their experience. Local residents reported that the cost of basic food items remains a daily struggle, with meat prices still elevated and wages failing to keep pace with even the reduced inflation rate.

The government pointed to emerging positive signals: formal employment grew by 1.2% in the first quarter of 2025, the first quarterly increase since 2022, and real wages in the private sector began recovering in April as inflation fell below nominal wage growth for the first time in 18 months. The construction sector added 8,400 jobs in March, driven by infrastructure projects in Vaca Muerta and Buenos Aires.

"We're at an inflection point," said Caputo. "The first phase was stopping the crisis. The second phase is rebuilding. That phase is just beginning."

The opposition Union for the Homeland bloc called the poverty data "a national tragedy" and announced plans to file a motion of censure against Caputo in the Chamber of Deputies, though the measure has no binding effect and is unlikely to pass.