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Brazil & Southern Cone - February 2014 (ISSN 1741-4431)

ARGENTINA: Inflation: the truth hurts

After seven years of manipulating the inflation figures issued by the national statistics institute (Indec), on 13 February the government revealed its new, IMF-compliant methodology. Under the new national consumer price index (IPCNU), month-on-month inflation in January was 3.7%, much higher than the average monthly rates previously reported by the Indec and closer to estimates by private analysts. Given the sharp devaluation of the peso in January, the economy minister, Axel Kicillof, argued that the debut figures would come to be seen as an anomaly. Following the minister’s logic, local economists’ extrapolation of the monthly figure, which produced full year inflation forecasts ranging from 44% to 55% in 2014, should be taken with a pinch of salt. Nevertheless, the new figure is likely to fuel even high wage demands by unions currently negotiating pay deals with the government.

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