Argentina: Prices rise less than expected in March
April 15, 2014
According to the new inflation index elaborated by the National Statistics Institute (INDEC), consumer prices increased 2.6% over the previous month in March. The reading came in below the 3.4% increase recorded in February and undershot market expectations of a 2.9% rise. The more moderate increase reflects the lasting impact of the price-caps on basic goods that the government adopted at the beginning of the year, which helped counterbalance the impact of the devalued peso on prices.
The new inflation index measures prices in the entire country, whereas the previous readings were based solely on Buenos Aires and the surrounding metropolitan area. The new index was unveiled in February in hopes of restoring confidence in official inflation data and in response to the timeline the International Monetary Fund (IMF) set in December 2013 that 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 had 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 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 3.3% in March over the previous month (February: +4.3% month-on-month) and annual inflation rose from 34.9% in February to 37.3% in March, marking the highest level since independent inflation records first began in June 2011.
On the back of the new inflation estimates, panelists revised up their projections for official inflation. LatinFocus Consensus Forecast panelists see official inflation at 23.1% by the end of 2014, which is up 5.1 percentage points from last month's estimate. Panelists estimate that official inflation will slow to 22.1% by 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 35.3% in 2014, which is up 0.9 percentage points over last month's forecast. Analysts see non-official inflation slowing to 29.4% in 2015.
Author: Armando Ciccarelli, Head of Data Solutions