MercoPress. South Atlantic News Agency

Inflation or no inflation: that is the question for the Argentine government

Cabinet chief Anibal Fernandez: “I don’t agree with minister Boudou”

Fissures inside the Argentine cabinet are surfacing and refer to one of the most irritating issues for the administration of President Cristina Fernandez de Kirchner: inflation or no inflation.

Although official inflation in Argentina ranges 11.5%, private estimates from advisory economic and financial groups as well as market operators support estimates above 25% …and climbing. Labour contracts, even when the unionized workers confederation is a close ally of the Kirchner administration have been agreed on a 25% inflation floor.

Cabinet chief Anibal Fernandez said he could not agree with Economy minister Amado Boudou when he recently stated that the increase of the consumer prices index only really affects part of the society: the upper middle-class.

“I don’t agree with that, normally it’s the other way around” said Fernandez who admitted that it is precisely in the lower fixed income brackets where inflation “most impacts”, particularly in food and beverage items “where we are seeing the most significant increases”.

The inflation issue had already been addressed by Interior Minister Florencio Randazzo, who had focused the matter in beef prices, a staple for Argentine consumers. The cabinet chief however went further.

According to Fernandez the problem is not with the government but with the entrepreneurs, a similar hypothesis to that developed by minister Randazzo during a press barrage on radio and television interviews.

“It’s not Indec (Statistics Office) that increases prices. Those who produce goods increase prices, and we are not going to defend those people”, said Fernandez in support of the much controversial data from Indec and putting the blame on private businesses.

But business organizations reacted and the Argentine Industrial Union, UIA, the main manufacturers organization and lobby claimed the government focus was “simplistic and the easy-way out of the problem, blame thy neighbour”.

“You can’t correct inflation unless you begin by admitting you have a problem”, said UIA president Hector Mendez. More sarcastic UIA Vice president Ignacio de Mendiguren said that “these are the same entrepreneurs from the time of former president Nestor Kirchner when inflation was only 5%”.

“That inflation (private estimates) does not exist. Those who increase prices are business leaders. I’m not saying that beef has not increased, maybe it’s a conspiration”, insisted Anibal Fernandez.

“The 25% inflation is non existent. It’s only sustained in public statements by private interests. I know what is spent at home and in the homes of the needy. That is why we are working to change conditions, but the task is not magic”, he added.

“We admit prices have increased but don’t bill it on us, look out for those who up the prices”, insisted Fernandez in his attack on entrepreneurs.