Argentina’s annual inflation rate in July rose to the highest level since May 2006, led by higher costs for leisure goods and clothing. Consumer prices increased 11.2 percent from a year earlier and 0.8 percent from June, the national statistics institute said today in Buenos Aires.
Private economists and politicians including Vice President Julio Cobos have questioned the government data, saying officials have been underreporting price increases since January 2007, when former President Nestor Kirchner made personnel changes at the National Statistics Institute. The government said the changes were made to improve operations.
“The inflation problem in Argentina is absurd,” said Nicolas Salvatore, an economist at Buenos Aires University. “It has an easy solution. We have to tighten the monetary base and slow economic growth to 4 percent.”
Morgan Stanley more than doubled its growth forecast for Argentina, South America’s second-biggest economy after Brazil, to 9.7 percent in 2010 from an earlier estimate of 4.6 percent. The expansion would be the fastest since 1992.
Money supply last month surpassed the central bank’s target as dollar purchases pushed reserves to a record $51 billion. M2 money supply, which includes cash in circulation and deposits in savings and money market accounts, rose 23.8 percent in July from a year earlier to 217.8 billion pesos ($55.4 billion), exceeding a target of 214.4 billion pesos, the central bank said yesterday in a monthly report.
Independent Estimates
Researchers at Buenos Aires University, led by Graciela Bevacqua, who was removed from her post as director of the statistics agency’s consumer price index department under Kirchner in 2007, reported that consumer prices rose 1.9 percent in July from June.
Earlier this week, the Senate passed a bill to make Indec, as the statistics agency is known, independent from the government. The bill requires that the Senate approves the nomination of the agency’s director and would create a bicameral oversight committee. The legislation will next go the lower house for consideration.
Still, former Finance Undersecretary Miguel Kiguel and analyst Daniel Kerner, at the Eurasia Group, don’t believe that the bill will improve the transparency in the institute’s reports in the short term.
“This is a positive step, but a move toward full transparency will be tough and could take a long time, possibly even after the end of Cristina Fernandez de Kirchner’s mandate in December 2011,” Kerner wrote yesterday in an e-mail.
The peso was little changed at 3.9328 per dollar today. It has declined 3.4 percent against the dollar this year.
Written by Eliana Raszewski for Bloomberg.com
To contact the reporter on this story: Eliana Raszewski in Buenos Aires at This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Source: http://www.bloomberg.com/news/2010-08-13/argentina-reports-its-fastest-annual-inflation-in-four-years-during-july.html
