April 17 (Bloomberg) -- Officials at Chile’s National Statistics Institute questioned the agency’s methodology for measuring consumer prices, after analysts said the organization may be underestimating inflation by as much as half.
In a letter received by Bloomberg, division chiefs said the institute’s director Francisco Labbe had dismissed recommendations made to modernize the methodology. The letter was addressed to Labbe and was signed by five division directors including Cristian Copaja, who heads up the office that researches prices.
Institute employees have been studying ways to improve the inflation methodology and consulted an international expert after they raised questions in 2010 about clothing prices, which have fallen faster than any other item, according to the letter. Labbe’s refusal to accept their recommendations hurts the institute’s credibility as analysts question their reports, the officials said.
“The constant public controversies unfairly call into question the quality of the work and advances made so far, in addition to generating uncertainty about the other statistical products,” according to the letter. “It isn’t healthy for the country’s statistical institutionalism.”
Labbe didn’t immediately return a call from Bloomberg seeking comment on the allegations.
Analysts including Morgan Stanley’s Luis Arcentales and Jorge Selaive, a chief economist at Banco Bilbao Vizcaya Argentaria SA, have questioned the institute’s methodology for measuring prices, with the latter saying annual inflation would be closer to 3 percent than the 1.5 percent reported in March.
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