MercoPress. South Atlantic News Agency

Argentina with the world’s fourth highest inflation, says private bank

Inflation expectations have also risen and for November reached an annualized 30%

Argentina is the country with the world’s fourth highest inflation, behind Sudan, South Sudan and Byelorussia, according to a report from a leading Argentine bank from the City of Buenos Aires.

The bank takes into account the so called Congress-index based on private estimates and which jumped 1.8% in October and very close to an annual 25%.

In a world where even in emerging economies inflation has been successfully controlled, Argentina for the sixth year running is among the ten nations with the highest inflation in the world, having climbed five positions from 2011, says the report from Banco Ciudad.

The official inflation in Argentina last month was up 0.8% and 10.2% in the past twelve months, according to the national stats office Indec, which is greatly discredited both at home and overseas including the World Bank and the IMF that has questioned the estimates.

The report also points out that inflation in Argentina is already above that of other countries which last year were at a higher level such is the case of Malawi, Ethiopia, Burundi, Yemen and Venezuela. Furthermore Argentina’s index is almost five times that of most of its neighbours: Brazil, Chile, Colombia, Mexico and Peru which have inflation rates ranging from 3% to 6%.

“Sustained inflation is causing distortions in the economy which as can be seen are as, or more burdensome that inflation itself. The exchange appreciation is beginning to erode the profitability of exports sectors and thus the creation of jobs begins to suffer the consequences”, adds the report which also points to the freezing of public utility rates and the government’s policy of increasing subsidies as contributors to the overall distortions.

The Banco Ciudad report follows the monthly survey from Torcuato Di Tella University, UTDT, which shows that Argentina’s 12-month inflation expectations rose to 30%, up from 27% in October. While dipping in October, inflation expectations in each of the previous seven months had come in at 30%, UTDT, said in its closely watched monthly report Monday.

On an average basis, the response rose to 37.4% in November, from 35.1% in October.

UTDT report was based on a nationwide survey of 1,200 people by consultancy Poliarquia Consultores in early November.

Scepticism has surrounded Argentina’s official statistics since early 2007, when then-President Nestor Kirchner replaced long-serving Indec professional and much respected staff with political appointees.

Official and private-sector forecasts of inflation quickly diverged following the shake-up. The administration of President Cristina Fernandez regularly denies charges that it manipulates Indec economic data, but even loyal trade unions and the courts take as reference the Congress index.

The Argentine government has gone so far as to fine and bring criminal charges against private-sector economists who question official data. That has led the opposition Congress members to publish the anonymous private estimates to shield the economists from prosecution.