MercoPress. South Atlantic News Agency

Argentina's January basic food basket index up 2.95%

Argentina's basic food basket consumed by the average family jumped 2.59% last January over December, which is more than double the official consumer prices index for the first month of 2007.

In a release from the National Statistics and Census Office, INDEC, the basic food basket in January 2007 was equivalent to 136 US dollars for a family of two adults and two children, which is 9,38% higher than January 2006. The cost of the total basic basket which includes goods and services such as transport, education, health and clothing reached the equivalent of 293 US dollars in January that is 1.65% over December and 9.7% up from January 2006. According to the latest data from INDEC, during the first half of 2006, 31.4% out of a population of 36.5 million live below the poverty line. The announcement comes in the midst of markets' growing mistrust with official data following last week's sacking of the head of INDEC allegedly over discrepancies with the January consumer prices index that proved to be surprisingly far lower than expected, 1.1%. This had an immediate impact in Argentina's risk rating and sovereign bonds with yields linked to inflation. Since Argentina cancelled all pending debt with the International Monetary Fund in January 2006, the country risk rate dropped over 300 basic points reaching an all time low of 181 last January 29. However following the INDEC incident the country risk has jumped 10% and there's a growing feeling that official data "seems to have been politicized", particularly in an electoral year, according to Buenos Aires brokers and local analysts. The situation was highlighted by an article in the Financial Times signed by Benedict Mander from Buenos Aires saying that "the damage to the credibility of the INDEC data is expected to undermine the attractiveness of Argentine inflation-linked debt, and may also affect the annual round of wage bargaining that is under way".