Argentina: Inflation moderates further in February
March 15, 2011
In February, consumer prices rose 0.74% over the previous month, virtually unchanged over the 0.73% price increase registered in January but well below the 1.25% price increase tallied in February last year. As a result, annual headline inflation moderated from 10.6% in January to 10.0% in February. The price rise was broad-based, with prices in all major categories higher than the previous month. Official inflation data published by the National Statistics Institute (INDEC) continues to be met with suspicion ever since a controversial change in the methodology to measure price variations was implemented some two years ago. Allegations that INDEC data may be manipulated by the government have been repeatedly denied by the local authorities. Official inflation figures continue to be well below independent analysts' estimates. Early in March, the government issued fines against a number of economic consultancy firms over the publication of inflation estimates differing from INDEC's. The decision was heavily criticized, in particular by private economists and opposition parties, who claimed that the government was trying to silence dissenting opinions regarding the credibility of official inflation data. Against this backdrop, the International Monetary Fund (IMF), in agreement with the government, sent a technical mission to Argentina in early April to assist INDEC in the development of a new consumer price index. Hopes rest on the results of the mission in order to spell the controversy regarding official inflation figures. Consumers share the more realistic assessment of inflation made by private analysts'. According to a survey from Universidad Torcuato di Tella (UTDT) conducted in March, households believe that consumer prices will increase 25% over the next 12 months, which is down from expectations in February, when households anticipated a 30% increase.
Author: Armando Ciccarelli, Head of Data Solutions