Argentina: Inflation inches down in September
October 15, 2013
According to official figures, consumer prices for the Greater Buenos Aires area added 0.8% in September over the previous month, which was on par with the increase of the same magnitude recorded in August. Higher prices for healthcare and for clothing were the main drivers behind the increase in prices. Annual headline inflation inched down from 10.6% in August to 10.5% in September. Against this backdrop, on 10 October, the government announced a 45-day extension to the fuel price freeze that was launched in April. Analysts believe that the aim of the move is to keep inflation in check ahead of parliamentary elections on 27 October. LatinFocus Consensus Forecast panelists see official inflation at 10.5% by the end of 2013, which is up 0.1 percentage points from last month's estimate. Panelists estimate that official inflation will rise to 11.5% by the end of next year.
Official inflation data published by the National Statistics Institute (INDEC) have been met with suspicion since 2008 when a controversial methodological change was implemented. The issues resulted in Argentina being the first country ever to be censured by the International Monetary Fund (IMF) for not supplying accurate economic data. The resulting procedure could force Argentina's government into "compulsory withdrawal" from the IMF. The IMF established 29 September as a deadline to address the data quality issue. The government is currently moving ahead with preliminary work to develop a new inflation index, which will be put forward for acceptance by the IMF in a meeting in November. IMF Managing Director Christine Lagarde is expected to report to the Fund's board on Argentina's progress by 13 November.
On 18 September, a federal judge indicted Domestic Commerce Secretary Guillermo Moreno for abusing his authority when he fined a consulting firm publishing independent inflation data. In 2011, the government began fining consultancies for publishing their own independent inflation estimates. Over the last two years, however, courts have dismissed fines for seven consultancies.
A group of opposition lawmakers began collecting independent inflation estimates in 2011 in order to develop an alternative monthly inflation gauge, which is referred to as the "Congress Index" (IPC-Congreso). According to this index, consumer prices increased 2.11% in September over the previous month (August: +2.11% month-on-month) and annual inflation rose from 25.2% in August to 25.4% in September, the highest level in eight months. Independent analysts surveyed by LatinFocus expect consumer prices to increase to 26.1% in 2013, which is up 0.1 percentage points over last month's expectation. For 2014, analysts see inflation rising to 29.1%.
Author: Armando Ciccarelli, Head of Data Solutions