Argentina Inflation

Argentina

Argentina: Increase in consumer prices accelerates in July

August 15, 2014

Consumer prices increased 1.4% over the previous month in July, according to the new inflation index elaborated by the National Statistics Institute (INDEC). The reading came in just above the 1.3% increase recorded in the previous month and undershot market expectations of a 1.5% rise. That said, consumer prices have risen 15.0% since the beginning of the year. The slight acceleration tallied in July mostly reflected faster increases in prices for transportation and recreation.

The new inflation index measures prices nationwide, whereas readings prior to February were based solely on Buenos Aires and the surrounding metropolitan area. The new index was implemented in the hope of restoring confidence in official inflation data while also meeting the deadline that 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 prompted the IMF to censure Argentina for not supplying accurate economic data.

The new inflation figures, however, have not completely dispelled suspicions of underreporting, as the price increases that the INDEC has reported are below local private analysts’ independent estimates. According to the so-called “Congress Index” (IPC-Congreso), which is an alternative inflation gauge based on independent estimates that opposition lawmakers collect, consumer prices increased 2.5% in July over the previous month (June: +2.2% month-on-month) and annual inflation inched down from June’s 39.9% to 39.7% in July. June’s reading had represented the highest level since independent inflation records first began in June 2011.

LatinFocus Consensus Forecast panelists see official inflation at 28.7% by the end of 2014, which is down 0.7 percentage points from last month’s estimate. Panelists estimate that official inflation will ease to 27.8% 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 36.6% in 2014, which is up 0.3 percentage points over last month’s forecast. Analysts see non-official inflation slowing to 31.6% in 2015.


Author: Ricard Torné, Lead Economist

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