MercoPress. South Atlantic News Agency

Argentina's inflation is April doubles the Kirchner's index

The April Consumer Prices Index, CPI, in Argentina registered a 0.8% increase according to an official release from the questioned Statistics and Census Office, Indec. The index is half what private analysts were estimating and is bound to re-ignite the controversy about the alleged manipulation of Indec by the Kirchners' administrations.

The 0.8% index refers to the City of Buenos Aires and the surrounding counties which make up metropolitan Buenos Aires. The twelve months inflation to April according to Indec is 8.9%. The latest reading shows food prices increased 0.7%; clothing 1.6%; housing 1.4% and transport, 1%. Private estimates anticipated inflation in April would be in the range of 1.5 to 2%. According to the Buenos Aires press until other provincial Indec chapters, (not contaminated by the Kirchners influence) are released, will economic agents have a better idea of the real April CPI. Anyhow the private sector, even trade unions faithful to the Kirchner's administrations estimate that inflation in 2007 (based on labor contracts) was in the range of 18 to 23%, and more worrisome with growing expectations of higher rates in the coming months given the deteriorating political scenario in Argentina. Wholesale prices according to Indec increased 1% in April and 3.9% in the first four months of 2008, while the cost of construction, 1.2% and 3.1% respectively. The questioned accuracy of Indec's indexes has been at the heart of an ongoing controversy between the private sector, international investors and the Kirchners administration that is fearful of cooling the fast growing (overheated) economy and having to pay higher interest rates for the rescheduled sovereign bonds tied to domestic inflation. This week cabinet chief Alberto Fernandez and the head of Indec Ana Maria Edwin announced that beginning June a new methodology will be applied to the CPI which means that next month the two percentages will be available, based on the old and new systems. Apparently the new methodology updates and simplifies the index by contemplating several inclusions of current expenditures but will also cut the overall number of items considered from 800 to 440. The ongoing controversy has reached the courts and in the next three weeks Indec must present documents detailing the current methodology to calculate the Argentine cost of living. The presentation follows a claim from the Civil Rights Association, Buenos Aires chapter.