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UPDATE 2-Argentina says inflation accelerated as economy cooled
January 15, 2013 / 7:36 PM / 5 years ago

UPDATE 2-Argentina says inflation accelerated as economy cooled

* December’s inflation inches higher to 1.0 percent

* INDEC says annual reading 10.8 pct vs 9.5 pct 2011

* Private estimates put inflation at 25 pct despite slowdown

By Juliana Castilla

BUENOS AIRES, Jan 15 (Reuters) - Argentina’s inflation sped up to 10.8 percent last year, still far below independent estimates of about 25 percent that put the country’s inflation rate as the highest in Latin America.

Inflation remains stubbornly high despite a sharp economic slowdown in Argentina, Latin America’s third-biggest economy. Many economists say the government’s loose fiscal and monetary policies are to blame.

“The economy is showing clear signs of stagflation,” Goldman Sachs economist Alberto Ramos wrote in a briefing note.

“Inflationary pressures are so deeply entrenched that Argentina has now surpassed Venezuela as the country with the highest rate of inflation in the region,” he added.

While Tuesday’s data reflects an acceleration from the 9.5 percent rise in consumer prices reported in 2011, it is unlikely to ease skepticism over inflation data published by the INDEC national statistics agency.

President Cristina Fernandez is under pressure from the International Monetary Fund to improve Argentina’s widely discredited inflation data. The IMF is set to meet late this month to discuss Argentina’s progress.

INDEC said December’s consumer inflation was 1.0 percent , slightly higher than in previous months. That compares with a 2.2 percent estimate by private economists, according to the median in a Reuters poll.

The poll of six economists gave a median outlook for full-year inflation of 24.8 percent, with estimates ranging from 23.1 percent to 27.0 percent.

Economic activity is expected to pick up somewhat this year in Argentina, and few analysts expect price pressures to cool as the government gears up for a mid-term election scheduled for October.

“It’s hard to think inflation will ease given loose fiscal and monetary policy during an election year,” said Nicolas Bridger, an analyst at the Prefinex consulting firm in Buenos Aires.

HIGHEST RATE

Fernandez, a left-leaning Peronist who rarely mentions the word inflation, has fined independent economists who publish their own inflation forecasts.

Opposition lawmakers now publish the private forecasts every month in Congress. According to their estimates, December’s inflation was 2.1 percent with the full-year figure at 25.6 percent.

December’s INDEC data said price rises were fueled by healthcare and transport and communication costs, which rose by 2.2 percent and 3.8 percent, respectively.

Both train and bus fares rose late last month in and around Buenos Aires, the capital, explaining the sharp jump. Heavily weighted food and drinks costs climbed a modest 0.2 percent.

Inflation was 0.9 percent in November, bringing the 12-month figure to 10.6 percent at the end of that month.

Fernandez’s government defends INDEC’s statistics and has sought to tackle inflation with price controls and export restrictions, though plans to launch a new nationwide consumer price index are under way.

Last year’s non-official readings show Argentina with the highest inflation rate in Latin America, surpassing Venezuela’s 19.9 percent. Elsewhere in the region, Brazil closed the year with inflation of 5.8 percent, Uruguay with 7.5 percent and Chile with 1.5 percent.

Mariano Lamothe, an analyst at the Buenos Aires-based consultancy Abeceb.com, said Argentina’s inflation in 2012 “was higher than one would have expected given that the economy grew by about 1 percent.”

Official forecasts point to slightly higher growth, but many private economists also question the accuracy of gross domestic product statistics.

Argentines expect inflation of 37.2 percent over the next year, according to the latest survey by the Torcuato Di Tella University.

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