Nearly 8 in 10 Argentine households earn less than the national average, helping explain why consumer spending remains weak despite signs of improvement in the broader economy File Photo by Matias Martin Campaya/EPA
Aug. 17 (UPI) — Nearly 8 in 10 Argentine households earn less than the national average, helping explain why consumer spending remains weak despite signs of improvement in the broader economy, according to a Fundación Encuentro report based on estimates by consulting firm Consultora W.
Average household income reached 2.8 million Argentine pesos per month after taxes during the first quarter of 2026, or about $2,000.
However, 78% of households earned less than that average during the period amid a persistent loss of purchasing power due to inflation, the economic recession and wages failing to keep pace with the cost of living.
The report said 21% of households were in the lowest-income group and below the estimated poverty line.
This reality reflects what economists and analysts describe as a “two-speed economy.” While broader financial indicators show a strong stabilization under the economic policies implemented by President Javier Milei, Argentine households are experiencing the effects of the country’s most severe austerity program in recent history.
Economist Néstor Requelme, a consulting partner at REyVA Macro Estrategia, told UPI that the distribution of household income reflects changes in wages, prices, interest rates and the exchange rate, which have affected households differently.
Requelme said one of the main problems is the loss of workers’ purchasing power and the declining ability of wages to sustain families’ living standards.
“Above all, it reflects that wages have ceased to serve as an instrument of social cohesion,” he said.
Requelme said that as long as real wages continue to be used as an economic adjustment variable, it will be difficult to reverse the movement of households into lower-income groups.
“As long as current macroeconomic policy continues to use real wages as an adjustment anchor against inflation, interest rates and the exchange rate, fundamental variables in any economy and especially ours, downward social mobility is a process that will not stop,” he said.
The Fundación Encuentro report links the country’s income distribution to weak consumer spending. Although inflation has begun to ease and real wages have started to recover, lower-income households still have little room to increase spending.
“That concentration of incomes below the average helps explain why mass consumption remains depressed, even as macroeconomic indicators have been improving,” the report said.
Spending cuts, however, are not limited to lower-income families. Guillermo Olivetto, director of Consultora W, said during an event organized by Argentina’s Chamber of Social and Market Research Companies, or CEIM, that higher-income households are also reassessing their spending, according to Argentine news outlet Infobae.
Despite having greater financial resources, those households are reducing fixed expenses such as insurance and private health plans, cutting back on services and spending less on dining out, concerts and travel.
Consumers are also increasingly seeking discounts and promotions as their ability to save remains under pressure.
The shift is also evident in everyday purchasing decisions. Esteban Cagnoli, CEO of Worldpanel by Numerator, told Infobae that consumers are becoming “increasingly selective” and favoring neighborhood stores.
Cagnoli said the preference is not driven solely by convenience. Consumers are also trying to avoid impulse purchases and focus their spending on a smaller basket of goods.
The data point to an uneven recovery in income and consumption in Argentina. While macroeconomic indicators show signs of improvement, a large majority of households still face constraints on their ability to spend.