MercoPress. South Atlantic News Agency

Argentina estimates annual inflation in the range of 9.5 to 10%

Argentine Economy minister Felisa Miceli estimated inflation this year will range between 9.5 and 10%, following the release of the May index, 0.4%. She also announced that the issuing of a bond in local currency to soak liquidity from the money market was very successful

"May consumer prices index at 0.4% is still high, but we estimate annual inflation in the range of 9.5 to 10%" said Miceli who brushed aside claims that the Argentine Statistics and Census Office "lacked credibility", following a string of controversial personnel sackings and alleged manipulations with the system to calculate the indexes. Inflation indexes are crucial for Argentina since much of its rescheduled defaulted sovereign debt bonds are tied to a bonus based on the performance of retail prices. The accumulated inflation index in the first five months of 2007 reached 3.4%. "Last year was the same, some analysts didn't believe our inflation estimates but at the end had to admit we were right", said Miceli who did concede that the different regional indexes (between metropolitan Buenos Aires and the rest of Argentina) are "somehow conditioned" to different policies regarding transport rates (subsidized) and public utilities rates (frozen). Miceli said the recent issue of a bond in pesos, with a nominal interest rate of 10.5% and maturing in 2012 had "a very good market acceptance". According to Argentina's Statistics and Census Office a standard family of four in May needed 920 pesos (300 US dollars) to remain above the poverty line, which represents a 0.46% hike over April. The estimate in based on a Basic Basket made up of food and essential services for the upkeep of a family of four, wife, husband and two children. The Basic Basket in the first five months of this year has accumulated a hike of 2.36%. A step down is the Basic Food Basket, to keep afloat from indigence, which remained unchanged at 428 pesos (equivalent to 145 US dollars). In five months it has risen 3.31%.