BUENOS AIRES - Argentines, feeling the pinch of the world's highest annual inflation rates, are feeling both hopeful and weary as monthly price increases dip to their lowest in over two years amid tough austerity measures under President Javier Milei.

       Inflation in July came in at 4 per cent, Argentina's National Institute of Statistics and Census reported on Aug 14, the lowest since the start of 2022.

       In the 12 months through July, however, inflation topped 263 per cent - making it still the highest recorded in the world.

       The South American country is trying to emerge from a severe economic crisis which ushered libertarian outsider Mr Milei into power late 2023 as voters opted for a radical new approach to restore stability.

       Mr Milei's sharp cost-cutting campaign has helped bolster the state's embattled finances, allowed the central bank to rebuild reserves, and tamped down inflation - though it has taken a heavy toll on economic activity. Poverty levels have also risen.

       “I am tired, but this is something different to what we have seen before, that’s for sure,” said Miguel Jamui, a 69-year-old retired worker, who is hopeful Mr Milei’s maverick approach will start to yield results.

       Mr Milei's policies have helped bring down monthly inflation from over 25 per cent in December to now 4 per cent in July, though the country has slid into recession and subsidy cuts have pushed up prices of certain services and goods.

       Many Argentines still feel their purchasing power is dwindling despite inflation slowing, with poverty affecting half the population and over seven million children living in poverty, according to a study released this week by the United Nations Children’s Fund.

       Mr Milei's government argues that fiscal responsibility is essential to stabilse the economy and cautions that things will get tougher for Argentines before improving.

       Ms Maria Ruiz, a 43-year-old teacher, said she was still having to tighten her belt due to the economic crisis.

       “It’s incredible that every time you try to maintain a standard of living, you fall, you fall, you fall,” Ms Ruiz said near the iconic Obelisco monument in central Buenos Aires where shop windows were full of promotions to attract customers.

       “I see that merchants are trying to survive with promotions or whatever they can, but the truth is, it’s not enough.” REUTERS