Argentina publishes inflation figures for July on Friday that are again expected to be only half of private estimates.However, after a parliamentary defeat for the government this week, analysts say an end could be in sight to three-and-a-half years of alleged manipulation.
Critics say Argentina’s credibility has been severely damaged since Néstor Kirchner, the former president, began ejecting staff at Indec, the national statistics agency, at the start of 2007.
Since then, it has been churning out inflation data so suspiciously low that private companies, the central bank and the International Monetary Fund have publicly questioned their validity.
Private economists expect Indec to publish July inflation data of 0.7 to 0.8 per cent, but say the real figures are nearer 1.4 to 1.7 per cent.
On Wednesday, the senate passed an opposition bill by 39 votes to 26, with one abstention, to set a 150-day deadline to overhaul Indec. The bill now passes to the lower house.
There is no date yet for the vote, but the opposition should have a safe majority – raising the question of whether President Cristina Fernández might use a veto.
The government refuses to acknowledge there is any problem with inflation – a testy subject in a country ravaged by hyperinflation in the 1980s – saying rising prices are normal in an economy it expects to grow by 7 per cent this year.
But some workers have secured pay deals above 30 per cent in recent months, wildly out of step with official inflation, which Indec says is running at 5.9 per cent this year. Private economists are expecting a 2010 rate of about 25 per cent.
Nevertheless, change may yet be a long way off.
“I think normalisation of Indec is going to take some time,” said Fausto Spotorno, chief economist at the consultancy OJF.
Private analysts, who have called for more transparency from Indec, say the government is focusing on the prices of goods it seeks to fix, while excluding services and middle-class perks.
Gerardo Morales, an opposition senator, said it would be “madness” for the president to veto the bill. “When investors look at Argentina, the first thing they do is study our numbers. And if they see that we’re lying in the numbers, there’s no credibility and that affects investment,” he said.
Foreign direct investment fell by nearly 50 per cent in Argentina in 2008-09, according to the UN’s Economic Commission for Latin America.
Written by By Jude Webber in Buenos Aires for The Financial times
Source: http://www.ft.com/cms/s/0/cae39bce-a632-11df-8767-00144feabdc0.html?ftcamp=rss
