UPDATE 2-Argentina inflation rate slows to 3.4 pct in February

Mon Mar 17, 2014 5:16pm EDT

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By Hugh Bronstein

BUENOS AIRES, March 17 (Reuters) - Argentina's inflation rate slowed to 3.4 percent in February, the government said on Monday, the second monthly reading of a new consumer price index that came in far under expectations and left analysts with continued doubts about accuracy.

A month ago, the government reported 3.7 percent inflation for January. That was the first reading under a new measuring system meant to improve long-discredited official data in Argentina, Latin America's No. 3 economy.

Market watchers had expected a February inflation rate of 4.2 percent, according to a recent Reuters poll of analysts.

"Reported inflation shows that the policy stance to improve credibility remains only halfhearted," said Siobhan Morden, New York-based head of Latin American strategy at Jefferies LLC.

"There still seems to be a reluctance to recognize true inflation, especially against near-term wage negotiations," she added.

The Argentine government drew up the new index after being censured by the International Monetary Fund (IMF) for low-balling consumer prices data.

President Cristina Fernandez's administration had been criticized by investors as well as the IMF for publishing inaccurate data. Business leaders accused her government of manipulating figures since early 2007 in an apparent bid to reduce the country's payments on its inflation-indexed debt.

With private economists expecting full-year inflation of over 30 percent, one of the highest rates in the world and a major disincentive to investment, business and labor unions are preparing for tough upcoming wage negotiations.

Of particular concern to agricultural markets are strike threats by port workers who control the flow of farm goods from Argentina, the world's top soyoil and soymeal exporter as well as its No. 3 supplier of soybeans and corn.

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