MercoPress. South Atlantic News Agency

YPF admits ‘inflation in Argentina is a problem” and could be higher by next year

“Increased rates of inflation in Argentina could increase our cost of operation” admitted YPF in a filing to the US SEC

Argentine nationalized energy company YPF warned on Tuesday that inflation in the country may keep rising and affect its results, a rare admission considering the company is controlled by a government known for playing down the problem.

Inflation in Argentina has been around 25% for several years, according to private estimates, one of the highest rates in the world, but the government of President Cristina Fernandez says inflation is less than half that, and has fined economists whose estimates differ from its own.

However, YPF - which was nationalized last year when Cristina Fernandez administration seized control from Spanish oil company Repsol affirmed inflation, could get to be a problem.

“In recent years, Argentina has confronted inflationary pressure,” YPF said in a filing to the US Securities and Exchange Commission. The filing went on to describe the conflict between the official statistics agency and private analysts.

“Increased rates of inflation in Argentina could increase our cost of operation, and may negatively impact our results,” YPF added. “There can be no assurance that inflation rates will not be higher in the future”.

The IMF has reprimanded Argentina about its data transparency on inflation and GDP, and given the country until September 29 to take action. The World Trade Organization added its voice to the criticism in March, saying Argentina's restrictive trade policies could fuel price pressures.

However President Cristina Fernandez has remained defiant while her Economy Minister Hernan Lorenzino has at times appeared tongue-tied on the subject.

“I think that, eh, it's a ... Can we cut this off? Sorry,” Lorenzino said when asked about consumer prices in a documentary that aired in late April. His public relations aide went further and told the Greek television making the interview that “in Argentina we don’t discuss inflation”.

On Tuesday YPF reported a net profit of 3.902 billion Pesos in 2012, down 12.2% from 2011. The dividends to be paid this year come from last year's earnings, just as those distributed in 2012 derived from 2011 operations