Argentina Inflation


Argentina: Increase in consumer prices slows in August

September 12, 2014

Consumer prices increased 1.3% over the previous month in August, according to the new inflation index elaborated by the National Statistics Institute (INDEC). The reading came in just below the 1.4% increase recorded in the previous month and undershot market expectations of a 1.4% rise. That said, consumer prices have risen 18.2% since the beginning of the year. The slight acceleration tallied in August mostly reflected faster increases in prices for housing and basic services as well as for education.

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 which 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 2.7% in August over the previous month (July: +2.5% month-on-month). Annual inflation inched up from July’s 39.7% to 40.4% in August, which represented the highest level since independent inflation records first began in June 2011.

LatinFocus Consensus Forecast panelists see official inflation at 28.1% at the end of 2014, which is down 0.6 percentage points from last month’s estimate. Panelists estimate that official inflation will then ease to 26.7% at 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 37.1% in 2014, which is up 0.5 percentage points over last month’s forecast. Analysts see non-official inflation slowing to 34.3% in 2015.

Author: Ricard Torné, Lead Economist

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