Argentina debuts new inflation index

• Tweet
• 

• Tweet
• 

Cristina Fernández de Kirchner arrives at the G20 summit in September 2013, in St. Petersburg, Russia. Photo: Getty Images

Is Argentina making progress in more accurately presenting its economic data? For starters on Thursday it launched a new Consumer Price Index that measures inflation, by which it hopes to ease tensions with the International Monetary Fund and lure investors in to the country. For that to happen Cristina Fernández de Kirchner’s government will have to wait at least until it proves successful in not methodically underestimating inflation and is able to tackle the biggest economic problem the country faces. Argentina is the country with the second highest inflation in Latin America, only after Venezuela.

The highly awaited new inflation index aims to measure 200,000 prices across the nation’s 24 provinces rather than only Buenos Aires and its environs. The move is a reaction to the IMF censuring the country, the first nation to receive that ‘punishment,’ for its failure to report accurate economic data. It is moot whether the new index is a small, or big, victory for the Washington-based multilateral organization or the Argentine government. Or, if ultimately it’s all shenanigans by either side.

The IMF tried to take the launch of the new index to their field, in a press release: “the public release of a new national CPI by end March 2014 was a specified action in the IMF Executive Board’s December 2013 decision with respect to Argentina’s provision of data to the Fund,” it said. The new index will track prices on a basket of 520 goods and services, including food, drinks, clothing, housing, appliances, health care, transportation, communication, recreation and education

The government genuinely hopes for the best out of the new CPI as a way to regain confidence at home and abroad. It was almost unanimously agreed upon – even among some government loyalists – that inflation numbers were bogus. As a consequence of it economic growth in the country was overestimated, which led to a series of other problems. In a recent presentation in New York, Buenos Aires Governor Daniel Scioli, an influential figure at home, said today that his administration’s aim is to persuade businesses to invest in Argentina

Later in the day the national statistics agency, INDEC, reported that the January CPI rose 3.7% on the month. They say it was calculated with the new CPI and many economists applauded the number (not for the high percentage but for being more accurate). It’s a hat tip to the reality of high inflation in the country. However private consulting firms, according to opposition lawmakers in Congress, said that January’s inflation topped 4.6% that month, suggesting that the disagreement over the data will likely continue – at least until it’s polished. What is sure is that Argentina is trying to rebrand itself, though the process will be a long one.