MercoPress. South Atlantic News Agency

Argentina bans inflation from official jargon; inflation of synonyms

Price distortion and dispersion is the most admitted by Cristina Fernandez

Next October Argentines will be going to the polls to vote for president and renew Congress which anticipates a rough political eight months, but before that the administration of President Cristina Fernandez de Kirchner has to weather a round of labour contracts which will be demanding strong adjustments because of the “prices distortion and dispersion” since the word ‘inflation’ has been erased from the official jargon.

Among the unions involved, many of them supportive of the ‘Kirchner development model” are the powerful metal industry, banks, commerce and retailing, gasoline stations, construction, doormen and janitors and the oil industry, that as a concession say they are demanding to recover the ‘deterioration of salaries’.

All those unions managed hefty increases in 2010 in spite of the official argument that inflation in 2009 was below two digits: metal workers, 26.5%; banks, 23.5%; commerce and retail 29%; gasoline stations, 24%; construction, 27%; janitors, 27.5% and oil workers, 32%.

Furthermore some of these groups have managed a one time down payment or monthly advances until contract negotiations begin. In other words a ‘bridge’, until discussions get going.

However last year the official and notorious Statistics Office, Indec admitted the retail prices index was above 10%, but most private analysts, economic advisors, think tanks, universities, some provincial governments and even the Judicial in its court rulings work on estimates above 25%, because of the “distortions in some products’ prices which make up the family basket”.

Faced with such a situation an alarmed Argentine government then took the unprecedented initiative of inviting the IMF to help draft a new, reliable, consumer prices index, obviously admitting the difficulties of the current manipulation. Such elaboration is expected to take months.

What happens beginning the end of March and the end of April with the new labour contracts negotiations is anybody’s guess. However the Argentine government would want unions’ unrest, strikes and stoppages reduced to a minimum, while employers will try to defend their interests but will come under strong pressure, when not threats, to help ease tension.

But whatever happens it’s certain there will be an inflation of denominations and excuses to justify increased “prices distortion and dispersion”. However if Mrs Cristina Kirchner manages to keep Argentines concentrated on the consumption spree, even with eroding pockets, she may just manage to get off the hook.

However political analyst Joaquin Morales Sola mentioned in one of his regular columns that a recent public opinion poll asked if Argentines next October would like change or continuity with no names mentioned. A majority, 65% opted for a change while 35% for continuity. However pollsters had to increase the number of interviews from 10.000 to 15.000 because they only managed to get answers from 1.000. The rest could not care less about elections or `polling interviews.