Argentinean inflation hits 11-year high

Some economists believe government may still be playing with the numbers

Argentinean Economy Minister Axel Kicillof.
Argentinean Economy Minister Axel Kicillof.

The Argentinean government on Monday said the consumer price index (CPI) cam in at 3.4 percent in February, putting the country’s annual inflation rate at around 32.1 percent – the highest in 11 years.

When announcing the new numbers, Economy Minister Axel Kicillof said the devaluation of the peso in January continued to affect both the CPI and inflation the following month, but that the Central Bank had taken full control of the situation, especially after the dollar rose sharply against the Argentinean currency.

“There were some people who passed on prices based on dollar values, but this is a move that makes no economic sense,” he said, referring to businesses and companies that continued to peg their goods and services to the US currency.

In the two days that followed the government’s decision to devalue the peso, the dollar rose by 17 percent against the Argentinean currency.

After years of massaging the country’s economic figures, the government of President Cristina Fernández de Kirchner came under pressure from the International Monetary Fund (IMF) and other global organizations to begin publishing accurate data. Since 2007, economy officials had been rounding off the monthly CPI figure at around one percent, which raised suspicions among world economists that Buenos Aires was fudging the numbers.

Despite the new openness, some analysts remain skeptical

But in January, two months after Kicillof took over as economy chief, the government adjusted the figures, winning the praise of many analysts.

Inflation was already a problem before the Argentinean peso devaluation. Last year, it had reached 27.5 percent, according to the average combined CPI figures prepared by nine provinces.

Despite the new openness, some analysts remain skeptical. “The Kirchnerites never miss an opportunity to disappoint you,” said economist Eduardo Levy Yeyati, who had praised the government’s efforts to begin releasing accurate numbers in January. His consulting firm, Elypsis, had predicted February’s figure at around 5.3 percent.

“In these types of scales there is always bias, but only as much as one percentage point difference,” he said on Monday.

However, other economists at private consulting firms, such as Camilo Tiscornia, Fausto Spotorno, Marina Dal Poggetto and Jorge Todesca, believe the recent figures are credible, according to the Buenos Aires daily La Nación.

Kicillof devoted much of his time in front of the cameras on Monday to criticizing the methodologies used by the consultants, which he described as terse and only based on surveys taken in the capital, unlike the government’s own broader measurement scales.

In any case, Levy Yeyati said the index figure had not returned to the kind of implausible state seen when it was manipulated by controversial former interior trade secretary Guillermo Moreno, the man who controlled the economy until last November when Kicillof took over as minister.

“This isn’t a Moreno figure. I don’t think this is going to bring us more problems with the IMF because the difference between the private and the new CPI index is subtle and not so openly manipulated,” Levy Yeyati said.

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