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UPDATE 1-Argentina July inflation sparks analyst skepticism
August 6, 2007 / 7:46 PM / 10 years ago

UPDATE 1-Argentina July inflation sparks analyst skepticism

(Recasts, updates with analysts’ reactions, details)

BUENOS AIRES, Aug 6 (Reuters) - Argentina’s July inflation came in at a lower-than-expected 0.5 percent, the government said on Monday, as official consumer price data again aroused analysts’ suspicion of tampering.

A Reuters poll of 14 local and international analysts yielded a 0.7 percent median forecast for July inflation, with estimates ranging from 0.5 percent to 0.8 percent.

Analysts and economists in Argentina and abroad have repeatedly questioned recent inflation data reported by the INDEC statistics agency, saying the government is intentionally underreporting inflation in an election year.

“Nothing surprises us since the INDEC made methodological changes,” said Fausto Spotorno, an economist at Orlando Ferreres y Asociados. “We were expecting inflation would be a little higher, at least 0.7 percent.”

Inflation has proved to be the biggest economic challenge to President Nestor Kirchner, whose wife, Sen. Cristina Fernandez de Kirchner, is the front-runner in an October presidential election.

“You can see that the index is manipulated, it is not real,” said Rodolfo Rossi, an economic analyst and former central bank president. “Surely it must have some basis, but this is not the index that people are suffering.”

The consumer price index rose 0.4 percent in June and 0.6 percent in July 2006.

Prices for education rose 2.2 percent in July, INDEC said, followed by a 1.1 percent rise in transportation and communication costs, and an identical climb in prices for home furnishings and supplies.

In a report published ahead of the data’s official release, Deutsche Bank said: “Despite the fact every indicator points to high inflation, the official CPI reading keeps surprising on the downside.”

The CPI rose 4.4 percent in the first seven months of the year and 12-month inflation through July was 8.6 percent. (Additional reporting by Jorge Otaola and Walter Bianchi)

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