Argentina’s consumer prices rose 10.6 percent in March from a year earlier, the slowest pace since November, after supermarkets and home appliance stores agreed to freeze prices until June 1.
Last month, prices rose 0.7 percent, the national statistics agency reported today, above the median estimate of 0.6 percent of seven economists surveyed by Bloomberg.
Retailers agreed with the government of President Cristina Fernandez de Kirchner since February to keep prices on hold in a bid to slow inflation, fueled by wage increases of about 25 percent a year and increased public spending. This week the government set a cap on gasoline prices until October.
Official data contrasted with estimates by private economists, who have released their indexes through opposition lawmakers since 2011 in order to avoid government fines. Yesterday, opposition lawmakers said prices rose 24.4 percent in March from a year earlier and 1.5 percent from February, citing the average of private estimates.
“Historically, price controls have never worked,” said Claudio Loser, former Western Hemisphere director at the International Monetary Fund. “They keep issuing money, they have a complicated fiscal situation, the central bank continues to finance the government. There’s no reason to think that the inflation rate won’t rise further.”
Inflation estimates by private economists have been above the official data since early 2007, when Fernandez’s husband and predecessor, Nestor Kirchner, changed personnel at the statistics agency, known as Indec. The IMF has urged the government to release more reliable data and on Feb. 1 Argentina became the first country to be censured by the Washington-based lender for not providing accurate data.
Inflation-linked bonds lost 2 percent so far this year, compared with a 1.4 percent gain for Brazilian bonds and a 14.9 return for similar securities in Mexico.
Argentina will have a new index, that will take prices from urban areas nationwide, in September, Norberto Itzcovich, director at the statistics agency, told state-run news agency Telam on April 3.
Loser said that it doesn’t matter what methodology the country decides to use to measure inflation as the government seeks to rebuild confidence in the index so long as the data is inaccurate.
“If you put in wrong numbers, it doesn’t matter the technical quality of the index,” said Loser, who now runs the Centennial Group Latin America research company in Washington. “They are talking about new indexes, but they won’t take new actions before the elections to correct inflation measures.”
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