Argentina: Inflation slows down further in May
June 14, 2013
According to official figures, consumer prices for the Great Buenos Aires area added 0.7% over the previous month in May, which mirrored the result recorded in April. Higher prices for education as well as for healthcare were the main drivers behind the price increase. Despite the monthly rise, annual headline inflation edged down from 10.5% in April to 10.3% in May. LatinFocus Consensus Forecast panellists see official inflation at 10.3% by the end of 2013, which is down 0.2 percentage points from last month's estimate. Participants estimate official inflation to end next year also at 11.3%.
Official inflation data published by the National Statistics Institute (INDEC) have been met with suspicion ever since a controversial methodological change was implemented in 2008. These statistical issues have caused Argentina to become the first country ever to be censored by the International Monetary Fund (IMF) for not supplying accurate economic data, under a procedure that can end in "compulsory withdrawal" from the IMF. The government has repeatedly denied allegations that INDEC data are manipulated and, in March 2011, went a step further by fining a number of consulting firms for publishing their inflation estimates. However, a court decision on 15 May overturned the heavy fines imposed on those companies.
Independent inflation estimates have been collected since 2011 by a group of opposition lawmakers in order to elaborate an alternative monthly inflation gauge. According to this so-called "Congress Index" (IPC-Congreso), consumer prices increased 1.6% over the previous month in May (April: +1.5% month-on-month). As a result, annual inflation slowed from 23.7% in April to 23.4% in May, the lowest level in 14 months. Independent analysts surveyed by LatinFocus expect consumer prices to increase 26.3% in 2013, which is up 0.1 percentage points over last month. For 2014, analysts see inflation moderating to 28.8%.
Author: Armando Ciccarelli, Head of Data Solutions