(Bloomberg) -- Monthly inflation in Argentina slowed to its lowest level in May since early 2022, capping the fifth straight cooler print under President Javier Milei as market doubts linger that the trend can be sustained.

Consumer prices rose 4.2% last month, less than economists estimates for 5% and the lowest level since January 2022. From a year ago, inflation slowed to 276.4%, according to government data published Thursday. 

Communication costs and education led monthly price gains in May by categories. 

While far from a definitive victory, a slower pace of price increases marks another positive development for Milei this week after the majority of his economic reforms passed through the Senate early Thursday in a pivotal vote. 

His government also renewed a portion of its currency swap line with China, while the International Monetary Fund’s executive board is expected to approve the latest review of the country’s program sometime Thursday. Milei will participates in the Group of Seven summit in Italy this weekend, too. 

While the Milei’s administration is expected to trumpet the positive results of its economic shock therapy program, private economists see the current pace of monthly inflation as somewhat of a floor in the short term. Although inflation expectations have declined significantly this year, analysts surveyed by Argentina’s central bank in May don’t expect monthly price rises below 5% through September. Even by November, monthly inflation is seen at 4.5%. 

Milei has held off on removing a large portion of the subsidies that keep utility and public transport costs artificially low. Cutting these subsidies, which have surpassed $10 billion of annual government spending in recent years, are essential to Milei’s commitment to a fiscal balance this year. However, once subsidies are removed, prices will inevitably go up across the board because of the cascading effect utilities and transport have on all other categories. 

The Argentine peso’s parallel exchange rate is also under more pressure lately, fueling concern about some pass-through to prices. A stagnant inflation outlook for the second half of the year comes against the backdrop of another recession in Argentina: Economists project gross domestic product will contract 3.8% this year. 

--With assistance from Rafael Gayol.

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