MercoPress. South Atlantic News Agency

Inflation and reliable statistics take front stage in Argentina

The controversy surrounding Argentina's Statistics Office, Indec, has been aired by some of the closest allies of President Cristina Fernandez de Kirchner administration who are also questioning the reliability of the reports, particularly those regarding inflation.

This time it was the powerful Argentine Industrial Union, UIA, a beneficiary of the current policy of a weak local currency against the US dollar to help promote Argentine exports, which has asked for the urgent "normalization" of Indec. "Our aspiration is a quick normalisation of Indec, because it is to the benefit of everybody", said UIA vice president Jose de Mendiguren who also happens to be a close friend of the Kirchner family. "When we have to discuss salaries, costs in general and we doubt official statistics it means that unconsciously we are also uncertain about all the other indexes of the economy. It's no good for nobody", he added. According to de Mendiguren inflation in Argentina is in the range of 25% annually. "We work with the provincial inflation statistics and with the evolution of the costs we have to pay; besides the fact that salary adjustment claims (from the unions) take as reference that percentage". Indec has been in the middle of a serious controversy since former president Nestor Kirchner in late 2006 removed technical staff and replaced them with political faithful whom have made sure inflation numbers remain below two digits. This is essential to keep interest payments on rescheduled sovereign bonds linked to inflation and economic growth at "reasonable and affordable" levels. De Mendiguren said that UIA is in permanent contact with the government "and we regularly send them our technical reports on the issues" and "hopefully we expect Indec to change" and begin elaborating reliable indexes. The day before Fiat Argentina CEO Cristiano Ratazzi made similar comments during an interview underlining that "inflation in Argentina has become a very serious problem; I would add terribly serious, particularly for low and medium income groups". Other industry lobbies have also been warning about the damage which lack of credibility in Indec and its statistics reports are causing to the different sectors of the Argentine economy. Raul Zylbersztein head of the skin goods manufacturing chamber said it was time "to make indexes transparent". He added that his industry's main input were labor and equipment costs and "they have been moving on the basis of an annual inflation of 20% in the last twelve months". The toy manufacturers' chamber made similar comments saying Indec numbers "are not right". Treasurer Miguel Faraoni pointed out that "maybe the current situation helps government for some of its purposes but it has nothing to do with reality and the world people live in. We believe real inflation is above 20% annually" Footwear chamber president Alberto Sellaro was more cautious when talking about Indec but revealed that the industry' cost inflation in the first six months of 2008 was in the range of 8 to 10%. Last Saturday in her first press conference President Cristina Fernandez de Kirchner defended Indec proceedings and figures and said there was "no need to demonize" medium ranking officials in direct reference to Alberto Moreno, the Domestic Commerce Secretary, who is the mastermind behind the manipulation of Indec's indexes and the "creative accounting" which shows inflation is below two digits Commerce, industry and farmers are demanding his removal.