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Rents: Two easy ways to calculate inflation increases in May 2025 - La Nacion Propiedades
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May 02, 2025
Since the rental law was repealed in December 2023, contracts can be adjusted for inflation; here's what you need to know before moving forward.
Rents: Two easy ways to calculate inflation increases in May 2025. Gonzalo Colini
Since the repeal of the rental law through Javier Milei's Decree of Necessity and Urgency (DNU) in December 2023, the game has opened for defining how contracts are updated. One of the most popular options for landlords when adjusting them is to use inflation figures , which would allow them to avoid losing profitability.
While the rental law passed in 2020 was in effect, contracts had to be adjusted once a year based on the Rental Contract Index , better known as the ICL, prepared by the Central Bank. This index is based equally on inflation and wages, but is calculated with a two-month data lag. This means that those who update their rent in May, for example, do so based on March's inflation and wage figures.
In this context, and faced with an unregulated market, landlords and tenants are agreeing to new two-year contracts , in pesos and adjusted for the CPI . To adjust the rental price for inflation, the contract can reference the Consumer Price Index (CPI) , which is published by INDEC every mid-month .
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When signing the contract, the parties must also define how often the inflation adjustment will be made, that is, the frequency of the adjustment. "Due to the high inflation that marked the end of 2023 and beginning of 2024, following the repeal of the law, property owners prefer quarterly indexation. But in a normal time, indexation could be quarterly or semiannual," advises Dr. Enrique Abatti, president of the Chamber of Property Owners of the Argentine Republic.
How to calculate the rent increase in May based on inflation
With an automatic calculator
There are multiple automatic cumulative inflation calculators on the Internet that use data published by INDEC as a reference. One of them is Chequeado, which will be used as a reference below:- Go to https://chequeado.com/inflacionacumulada/
- Where it says “To buy something that was coming out” enter the rental amount that needs to be updated.
- For "at the beginning of," enter the month in which the period you want to adjust begins. For example, if you wanted to do a quarterly update at the beginning of May, you should consider the period from January to March.
- Where it says “at the end of,” enter the month in which the period from which you want to adjust ends.
- Where it says “you would need the sum of” the new rental value will appear .
For example, if a quarterly adjustment was agreed upon for a rent of $586,791 starting in February 2025 and due to be adjusted in May, the latest index published by INDEC is from March 2025. In this case, the three-month period from January to March 2025 will be used. Given that cumulative inflation during that period was 8.56%, the amount payable would be $637,020.39 per month.
Manually
If you decide to adjust manually, it's important to note that you shouldn't add up the inflation for each month, but rather multiply the inflation variations for each month and then multiply them by the rent, since this represents the accumulated inflation for the period.First, you need to know the inflation rate for the period for which you intend to adjust the rent . The steps to follow are as follows:
- Access the INDEC CPI report from the INDEC website ( indec.gob.ar ), then go to the "Statistics" tab, click on "Prices" in the Economy section, and then select the "Consumer Prices (CPI)" button. You can also access it directly from this link .
- Click on the “read report” button.
- On the fourth page of the document, see the second graph, "Monthly Changes in the General CPI Level." There you can see the inflation rate for each month, which will be used to calculate the rate of change for the desired period.
Once the data is located, the steps to create the account are as follows:
- First, you must separately calculate the inflation rate for each month, divided by 100 and adding 1. For example, January's inflation was 2.2%, and dividing 100 gives 0.022, plus 1 equals 1.022. Continue this process for each month within the update period.
- Then you have to multiply the current rent value by those individual inflation values.
- The result will be the new rent to be paid for the next quarter.
- In other words, the formula would be: the value of the rent x (inflation first month/100 + 1) x (inflation second month/100 + 1) x (inflation third month/100 + 1) = updated value of the rent.
In a concrete example , if a rental contract for $ 586,791 was signed on February 1, 2025, with a quarterly inflation adjustment, it would have to be adjusted for the first time in May. Since the INDEC report is released mid-month, data for January, February, and March would be available on May 1, but not yet for April.
The monthly inflation rate for those months was 2.2% in January, 2.4% in February, and 3.7% in March.
After dividing each by one hundred and adding one, the account would be: 586,791 x 1,022 x 1,024 x 1,037 = $636,814
The result does not always coincide with the calculation made using the automatic calculator ( chequeado.com ), since the figures published monthly by INDEC are rounded (the number may contain a greater number of decimals which, when considered in the account, may vary between 100 and 300 pesos more/less than the final result).
In practice, the tenant will be able to know how much their rent will increase half a month before the adjustment. This is because—using this example as a reference—they can already know the inflation rate for March by mid-April and, thus, calculate how much they will have to pay in May. However, the figure could change if the rent is paid at the end of the month because the inflation rate for the previous month, in this example, April, would already be available.
The figure could change if the rent is paid at the end of the month because the inflation percentage for the previous month would already be available. Gonzalo Colini
www.buysellba.com
