ARGENTINA: Inflation index hits 3.7 percent increase in just one month, government report
Record ID:
447729
ARGENTINA: Inflation index hits 3.7 percent increase in just one month, government report
- Title: ARGENTINA: Inflation index hits 3.7 percent increase in just one month, government report
- Date: 14th February 2014
- Summary: BUENOS AIRES, ARGENTINA (FILE) (REUTERS) VARIOUS OF THE EXTERIOR OF THE ARGENTINA CENTRAL BANK VARIOUS OF POSTED DOLLAR EXCHANGE RATES
- Embargoed: 1st March 2014 12:00
- Keywords:
- Location: Argentina
- Country: Argentina
- Topics: Economy
- Reuters ID: LVAEPTZGERPMW32WSADQ7Z56WRLZ
- Story Text: Argentines on Friday (February 14) said they were sceptical of a new consumer price index the government is using as it looks to tame criticism it is underreporting inflation while also seeking to restore investor confidence in official economic data.
Using the new index, Economy Minister Axel Kicillof on Thursday (February 13) announced Argentina's consumer prices rose 3.7 percent in January from December.
"The urban consumer price index in January 2014, so the change in that month compared to the month before, December 2013, at a general level went up 3.7 percent," Kicillof said.
The figure was the first reading published under the new index designed in consultation with the International Monetary Fund.
The previous index had been widely discredited and was broadly considered to under report the actual number, prompting censure from the IMF.
Nonetheless, on Friday (February 14) many Argentines still seemed weary of the government's numbers despite its concession of high inflation.
Economic analyst Matias Tombolini said there were signs the government was finding new ways to undercut the news of inflation blaming it on a recent peso devaluation.
"I don't think it is more impactful than one that implies the government recognizes there is inflation in Argentina. Already some official sources are associating the rise in prices to the devaluation rate, which is actually the reverse. There was a devaluation because there was inflation which made Argentina expensive in dollar terms," Tombolini said.
Analysts have accused Argentina's government of manipulating inflation figures since early 2007 for political gain as well as to reduce payments on its inflation-indexed debt.
Residents of Buenos Aires also expressed their doubts.
"We'll have to see what they [the government] say in the next indices and then we will see. I'm doubtful. I don't have a lot of faith," one resident, Claudia Ochaman, said.
"Inflation in January was a lot more than 3.7 percent, I still don't [believe them]. But maybe they will convince the IMF, right?" another resident, Norberto Froz told Reuters.
Private economists estimated consumer prices rose 5.6 percent last month, according to the median in a Reuters poll of six analysts.
Independent economists say Argentine inflation is running at about 30 percent annually.
The new index is seen as a sign that the country is trying to get its relationship with the IMF back on track. Previous official inflation figures were often less than half private estimates.
"The objective of this new index is to get more confidence internationally because the false indices won't achieve anything. The objective is to get some money [internationally] to try and rebuild the reserves because the rate of loss is very high. If they don't get it, the other option is to directly raise interest rates, stop imports, rebuild the dollar clamp, or prohibit people from buying dollars, and manage the loss of reserves as best you can until the end of the term," another economic analyst, Fausto Spotorno said.
With reserves draining away, Argentina is seeking access to international money markets, which it has been shut out of since its massive 2002 debt default.
The country has also recently revived long-stalled talks to resolve some $9.5 billion in debt it owes to the Paris Club, a group of creditor nations.
Argentine officials are seeking a settlement with the Paris Club at a time when its currency reserves have fallen to seven-year lows.
Government officials hope any deal could bring new sources of international funding and provide hard currency. - Copyright Holder: FILE REUTERS (CAN SELL)
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