UPDATE 1-Argentina April inflation below expected at 0.7 pct

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By Cesar Illiano

BUENOS AIRES, May 4 (Reuters) - Argentina's consumer inflation was 0.7 percent in April, lower than expected by the market, due to rising prices for clothing and school fees, the national statistics bureau said on Friday.

The inflation figure, which has been under close scrutiny in recent months, was below the 0.8 percent median forecast in a Reuters poll of eight local analysts, whose estimates ranged from 0.6 percent to 0.9 percent.

April's figure is the first inflation data reported since the government named a new head of the National Statistics Institute, or INDEC, in an effort to restore credibility to the consumer price data.

Since January, some INDEC workers and economic analysts have accused the center-left government of President Nestor Kirchner of tinkering with the sensitive inflation figure in the run-up to presidential elections in October.

The government denies any manipulating of data.

Accumulated inflation for the first four months of the year was 3.0 percent, and 8.9 percent in the 12 months to April, the statistics agency said in a statement.

To restrain prices, the government has struck a series of accords with businesses to freeze the price of basic goods.

But many analysts think the accords are losing their effectiveness, and the measures have drawn fierce criticism from some sectors of the economy, such as farmers.

The inflation figure is key to determining how much Argentina pays to holders of inflation-linked bonds and setting a floor for annual wage negotiations. It also affects official poverty measurements.

Argentina's inflation rate was 9.8 percent in 2006, compared with an unexpectedly high 12.3 percent a year earlier ARECI09.

The country's consumer price index rose by 0.8 percent in March and 1.0 percent in April 2006.

A central bank survey conducted last month forecast April inflation at 0.7 percent, according to the median outlook BCRA29. The central bank forecasts inflation this year at below 11 percent.