MercoPress. South Atlantic News Agency

Corporate Argentina criticizes gov for double digit inflation

Rattazzi: “You can't cure a drugs addiction with aspirins”

With August gone and inflation estimates for the month in the range of 1.6 to 2.2% corporate Argentina has joined the bandwagon and is warning about the impact of double digit prices for consumers, industry and unions trigger clauses.

Cristiano Rattazzi, FIAT Argentina CEO warned that "it's going to be most difficult and complicated" to eliminate double digit inflation, but insisted that "it must be done" to return markets to normal conditions. "We're the only country in the region with two digit inflation and eliminating it needs strong measures: you can't cure a drugs addiction with aspirins". The powerful corporate executive also criticized the bill to "re-statizise" Argentina's flag air carrier Aerolineas Argentinas which has already been approved in the Lower House. "It is a disastrous decision for the government, tax payers and a terrible message for investors", underlined Rattazzi. "We must again understand that the state is each of us". Rattazzi pointed out that airlines are "a difficult and complicated industry" However Rattazzi was optimistic about the automobile industry in Argentina which he anticipated was heading for a new production record, "?but because of the export market". Rattazzi's comments follow last week's meeting in Cordoba of manufacturers where inflation and the government's Statistics Office Indec came under heavy fire from participants because of their unreliability. Juan Carlos Lascurain president of the powerful Argentine Industrial Union said Indec has "lost credibility" and there's a ten points gap "at least" between "official" and real consumer prices index. Lascurain insisted that "we need Indec for our own negotiations, estimates, labor contracts, and the government which has done positive things should address and solve the Indec problem once and for all". Ratazzi said that companies can deal with inflation "until such a point" when it begins to influence all values of the economy and "the competitiveness of all of us; this is a very serious macroeconomic challenge that must be addressed". Finally Diego Coatz an economist from UIA underlined that the current real exchange rate in Argentina is "at the same level as in 2001" (pre-default crisis), and Bernardo Kosacoff another economist warned that given the country's uncertainty, "manufacturers are more inclined to import than to produce locally".