MercoPress. South Atlantic News Agency

Argentine inflation running at an annualized 28/30%

Accumulated inflation in Argentina over the last 12 months by the end of July was 28%, with food prices having risen 39% in that period and index-linking already beginning to take place, according to economist Carlos Melconian.

Speaking on Tuesday at an event organized by the ACIA Argentine association of industrial credit, the economist who belongs to one of Buenos Aires main economic consulting agencies said that "due to this rise in prices there will be wage demands of between 10 and 20% over and above the raises given this year," adding that "the margin for further wage hikes is at its limit, further rises become a cost for companies". In a part of his speech, the economist said that the various problems faced by the government "are covered up with public spending, with a totally inefficient management of public accounts. The issue is that despite the fact that public spending has now hit 60 billion US dollars (18.4% of Gross Domestic Product) it isn't enough because no decisions are made. Spending adjustments are inevitable". Melconian lambasted the government for having become "a soy price addict because it needs increasing amounts. But now that soy prices have hit 450 US dollars a ton, the wastage is on such a scale that it isn't enough. As to how the economy will evolve, he said that "a close watch will have to be kept on inflation and soy prices because these are two variables that could become the detonators of the current economic model". Melconian inflation estimates were confirmed by the Statistics Offices from the provinces of San Luis and Santa Fe which are ruled by non Kirchner parties. In San Luis, July retail inflation was 1.4% and in Santa Fe, 1.5%, more than triple the official 0.4% index from the Buenos Aires based controversial Statistics and Census Office, Indec which has seen its technical staff replaced by Kirchners' political appointees. In the first seven months of 2008, inflation in San Luis was 16.9% and in Santa Fe, 16.4%, which means that at the end of the year they should be in the range of 30%. This compares with Indec's estimates of 10% for the city and province of Buenos Aires. The sensitive Food item during the first seven months of this year soared 21.8% both in San Luis and Santa Fe. The main difference with the official Indec refers to Clothing which allegedly only increased 0.1% in seven months in Buenos Aires, while in the two provinces the item soared 15.2% and 16.6%.