MercoPress. South Atlantic News Agency

Official July inflation further impairs Cristina's image

Argentina's Statistics and Census Office, Indec, announced Monday that July consumer prices index reached 0.4%, below analysts' forecasts and market estimates, further deteriorating the credibility of President Cristina Fernandez de Kirchner administration.

The private sector, some provincial governments, trade unions and staff from Indec accuse the government of manipulating numbers to report an inflation below the real index, which is estimated to be running at double the official "creative accounting". The latest Indec index is lower than that of July 2007 and brings accumulated inflation in the last twelve months to 9.1% and 5% in the first seven months of 2008. Last June, CPI increased 0.6%. The official monthly statistic shows Leisure soared 3%, followed by household equipment and maintenance, 1.5%; medical attention 1.1%; clothing, 0.9%; transport and communications 0.6%; education 0.3% while food and beverage actually decreased 0.9%, supported by a 20.2% and 4.8% fall in cooking oil and beef prices respectively. Indec also released wholesale prices which in July climbed 0.7% and 7.3% in the first seven months of 2008, while construction costs jumped 3% to 11.4% in seven months. Private sector estimates range from 1.5 to 1.8% in July totaling 24 to 30% in the last twelve months. Over 40% of Argentina rescheduled foreign debt is linked to the country's rate of inflation which helps understand why former president Nestor Kirchner in 2006 decided to change technical staff for political faithful in Indec. Investors' reaction to the latest Indec announcement has been to cut losses while domestically the powerful trade unions movement CGT, which supports the Kirchners publicly admitted that inflation "is out of control" and Indec credibility has "significantly deteriorated".. "What's the use of achieving 25% salary increases if inflation is higher. It's the government's full responsibility to implement efficient measures to stop this inflationary escalade", said Hugo Moyano, Argentina's main labor leader and close friend of the Kirchners.