Argentina: Argentina launches new inflation index
February 14, 2014
On 13 February, the National Statistics Institute (INDEC) unveiled a new consumer price index in the hope of restoring confidence in official inflation data. The publication of new inflation figures comes in response to the timeline the International Monetary Fund (IMF) set in December 2013 that required Argentina to release new GDP and inflation figures by March 2014. The previous inflation index was viewed with suspicion both within the country and abroad for underreporting inflation figures, which had prompted the IMF to censure Argentina for not supplying accurate economic data.
The new inflation index measures prices in the whole country, whereas the previous readings were based solely on Buenos Aires and its metropolitan area. According to the new figures, consumer prices increased a hefty 3.7% over the previous month in January. INDEC did not publish figures for annual inflation.
The reading came on the back of higher prices for all the categories covered by the index, with notable rises in the prices for food and beverages as well as for transportation. The hefty increase largely reflected the impact of the devaluation of the peso at the end of January, which prompted many businesses to mark up their import goods. If compared to the former inflation index, January's result would represent the highest monthly inflation since July 2002.
The new inflation gauge brings official inflation figures closer to the independent estimates made by local private analysts. According to the so-called "Congress Index" (IPC-Congreso), which is an alternative inflation gauge based on independent estimates collected by opposition lawmakers, consumer prices increased 4.6% in January over the previous month (December: +3.4% month-on-month) and annual inflation rose from 28.4% in December to 30.8% in January, the highest level since independent inflation records began in June 2011.
On the back of the new inflation estimates, panelists revised up their projections for official inflation notably. LatinFocus Consensus Forecast panelists see official inflation at 16.5% by the end of 2014, which is up 3.4 percentage points from last month's estimate. Panelists estimate that official inflation will slow to 15.8% by the end of 2015. Forecasts for the non-official inflation gauge point to even higher figures. Panelists surveyed by LatinFocus expect non-official consumer prices to increase to 34.0% in 2014, which is up 4.5 percentage points over last month's forecast. Analysts see non-official inflation slowing to 30.2% in 2015.
Author: Armando Ciccarelli, Head of Data Solutions