BUENOS AIRES (Dow Jones)–Inflation in Argentina slowed significantly in October to a 0.6% rate from the prior month, according to Indec, the national statistics agency that has been criticized for allegedly fudging economic data.
Most economists have denounced Indec’s official inflation figures and accused the government of low-balling the numbers for political gain and to trim debt payments indexed to inflation.
Indec said that prices were up 9.7% on the year in October, but economists say that inflation is actually running at an annual rate of over 20%.
The credibility of Indec’s CPI data has been called into question ever since former President Nestor Kirchner replaced long-serving staff with political appointees in early 2007. Official and private-sector forecasts of inflation quickly diverged following the shakeup.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com
(Adds background on the controversy over Argentina’s inflation reporting and rewrites throughout.)
BUENOS AIRES (Dow Jones)–Argentina reported a surprisingly low inflation rate for October, further stoking scepticism among many economists who accuse the government of doctoring the data.
The October consumer price index rose 0.6% on the month and 9.7% on the year, the national statistics agency Indec reported Friday. Economists polled by Dow Jones Newswires had expected the government to report a 0.8% month-on-month gain but said that October’s inflation was closer to 1.5%.
Most economists roundly denounce the official inflation figures and accuse the government of lowballing the numbers for political gain and to trim debt payments indexed to inflation.
Most economists say that annual inflation is actually running between 20% and 25% due to government spending, easy monetary policy and a booming economy that has pushed unemployment to multiyear lows.
The credibility of Indec’s CPI has been called into question ever since former President Nestor Kirchner replaced long-serving staff with political appointees in early 2007. Official and private-sector forecasts of inflation quickly diverged following the shakeup.
The government’s reluctance to acknowledge, much less address, that high inflation has put pressure on the exchange rate as investor bet the central bank will be forced to allow the peso to depreciate at a much faster pace than has been the case to date.
The peso has weakened almost 7% so far this year, closing at ARS4.267 to the dollar on Argentina’s MAE foreign-exchange wholesale market Friday.
But galloping consumer prices and the peso’s gradual slide has actually caused the local currency to appreciate in real terms during the last two years to the detriment of exporters in the manufacturing sector.
Doubts about just how long the central bank can maintain its current exchange rate policy have led to capital flight that is steadily eroding the central bank’s reserves.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com
Source: online.wsj.com