Argentina: Inflation eases further as government approves gasoline price freeze
April 12, 2013
According to official figures, consumer prices for the Great Buenos Aires area added 0.7% over the previous month in March, which was up from the 0.5% rise recorded in February. Higher prices for education as well as for clothing and footwear were the main drivers behind the price increase. Despite the monthly rise, annual headline inflation slowed from 10.8% in February to 10.6% in March. LatinFocus Consensus Forecast panellists see official inflation at 11.1% by the end of in 2013, which is up 0.1 percentage points from last month's estimate. Participants estimate official inflation to end next year at 11.1%.
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.
Against this backdrop, since June 2011, a group of opposition lawmakers have been elaborating a monthly inflation estimate based on the analysis of various private consulting firms. According to this so-called "Congress Index" (IPC-Congreso), consumer prices increased 1.5% over the previous month in March, down from the 1.2% recorded in February. As a result, annual inflation slowed from 25.3% in February to 24.4% in March. Independent analysts surveyed by LatinFocus expect consumer prices to increase 28.0% in 2013, which is down 0.1 percentage points over last month. For 2014, analysts see inflation moderating to 26.5%.
Against this backdrop, the Kirchner administration has taken measures in recent months to curb price increases, as the impact of rampant inflation is eroding the government's popularity ahead of mid-term congressional elections. On 10 April, the government approved a freeze on gasoline prizes for the next six months. The move follows a two-month supermarket price freeze approved by economic authorities in February and which has been extended until the end of May.
Author: Armando Ciccarelli, Head of Data Solutions