* Data still lags private estimates, undermines credibility
* Investors need accurate price data to evaluate risks
By Hugh Bronstein
BUENOS AIRES, May 7 When Argentina revamped its
consumer price index this year investors were relieved that
Latin America's No. 3 economy was trying to win back the trust
of financial markets after years of blatantly underreporting
Shunned by the global bond market for more than a decade,
Argentina unveiled a new consumer price index (CPI) as part of a
push to reestablish international credit and bolster central
bank reserves after a more than 30 percent fall last year.
But the new index continues to clock inflation at well below
analysts' estimates and the government has stopped listing the
products measured, raising questions over how much the data is
being dragged down by price controls that the administration
puts on scores of food and household items.
"We are not sure how far the deformation of data goes
because the government does not publish a list of the 520
products included in the index, so we do not know how many of
those products are subject to price caps," said economist and
former central bank chief Rodolfo Rossi.
From 2007 through 2013 Argentina's CPI reflected little more
than the opinion of the government's former price czar Guillermo
Moreno. A pugnacious defender of President Cristina Fernandez's
inflationary fiscal policies, Moreno was known for trying to
strong-arm retailers into keeping prices down.
In those years, Argentina reported inflation at about half
the rate estimated privately. The discrepancy hurt confidence in
the government, widened Argentina's sovereign risk spreads and
got the country censured by the International Monetary Fund.
The official inflation rate last year was 10.9 percent
versus private sector estimates of about 25 percent.
The new index showed inflation of 3.7 percent in January,
way under the 5.6 percent estimated by analysts in a Reuters
poll. In February, the government clocked inflation at 3.4
percent versus 4.2 estimated by economists surveyed by Reuters.
In March the official rate of 2.6 percent was closer to the
3.0 percent in the Reuters survey and the 3.3 percent offered in
a separate poll published by Argentina's Congress.
Economy Minister Axel Kicillof says only the state has the
capacity to gauge inflation in a country as big as Argentina.
'A BLACK BOX'
The Indec National Statistics Agency provides no data
breakdown for the six regions that make up the CPI. It does not
publish average prices for the items included, nor does it
publish core inflation, which measures long run trends by
excluding transitory price changes.
"The CPI will lack credibility as long as these details
cannot be seen by the public," Marcela Almeida, an Indec
mathematician, told Reuters.
"Starting in January we don't know what's being measured
because they reveal less and less information," she said.
Almeida had some of her duties taken from her by her
managers in late 2007 after her first public complaints about
the CPI. She was reinstated by a judge this year but is no
longer directly involved in preparing the CPI.
Indec officials declined interview requests.
Fernandez's second and final term as president ends in late
2015. In the past three months, she has cut heating gas
subsidies, let the currency devalue and is about to start debt
renegotiation talks with the Paris Club of creditor nations.
Investors hope the moves will improve Argentina's finances
but are still concerned about the accuracy of government data.
The CPI data is presented every month as "a black box", said
Indec employee and union spokesman Raul Llaneza. "You don't know
what goes into it," he said. "The nucleus of the problem is they
are hiding information needed as a tool to analyze the economy."
(Additional reporting by Anna Yukhananov in Washington; Editing
by Kieran Murray and Andrew Hay)