Argentina postpones fuel tax increases to reduce impact of global price pressures

Argentina's government delayed the effects of scheduled tax increases on liquid fuels and carbon dioxide, in a decree published on Wednesday, amid global instability caused by the U.S.-Israeli war against Iran.

The move aims to support economic growth through sustainable fiscal measures, the decree said.

The measure postpones the expected tax hike on liquid fuels and carbon dioxide for one month, until the end of April, the decree added. This is the second measure taken by President Javier Milei's administration in recent days amid energy price disruptions caused by the conflict in the Middle East.

On Friday, the government relaxed some gasoline quality standards, allowing local refiners to voluntarily blend up to 15% ethanol into gasoline, and reduce reliance on petroleum.

Rising fuel costs risk spilling through into transport and consumer prices, analysts say.

Argentina's monthly inflation rate held steady in February, official data showed, but still came in above expectations as sharp increases in housing costs, including rent and utilities, outpaced most other sectors. Private analysts had already raised their inflation forecasts for 2026 before a late‑February surge in global crude prices.

REGIONAL RESPONSES

Other countries in Latin America have also taken steps to address the uncertainty stemming from the conflict in the Middle East. Colombia raised its benchmark interest rate on Tuesday by 100 basis points as policymakers aimed to curb inflationary pressures.

Minutes from Chile's central bank showed that it briefly weighed raising interest rates at its meeting in March, while Mexico has reached a voluntary agreement with gas station owners to limit fuel prices, according to President Claudia Sheinbaum.

-Reporting by Hernan Nessi, additional reporting by Aida Pelaez-Fernandez, editing by Andrew Heavens, Kirsten Donovan/Reuters