Macroeconomic Forecast Inflation Concerns Not Going Away

August 2007 | Macroeconomic Forecasts

Another Argentine inflation data release, another round of scepticism surrounding the statistics agency's (INDEC) credibility. Month-on-month inflation for July came in at 0.5%, below the 0.7% median forecast of 14 analysts polled by Reuters. The outturn brought the inflation level to 8.6% y-o-y, which marks the ninth consecutive month that annualised inflation has ticked down. Prices for education rose 2.2% m-o-m in July, up from 0.6% in June, while transportation and communication costs experienced a 1.1% m-o-m price increase. The country's statistics institute has been under scrutiny for much of the year after a series of personnel changes and questionable figures. The stakes have now risen further after Federal Prosecutor Carlos Stornelli released a 157 page-report claiming that government officials changed some prices, and disregarded others in the index to hold down the published inflation rate. The Argentine government now faces a mammoth task on the inflation front - not only in bringing down the actual level, but in convincing the public of their credibility in statistics reporting. Although our forecast is for official CPI to reach 8.9% by year-end, we do not believe this truly reflects the Argentine

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