21 de diciembre 2007 - 00:00

Argentina postpones new price index

According to reports, the new CPI won't make its debut in January. Argentine economy minister Martín Lousteau wants to launch it once its "soundness" has been proved, not just at the statistical level, but also at the level of credibility. Difficult months lie ahead to carry out openness processes. In January, for example, increase in transportation value will have to be recognized. In parallel, the methodology cannot be changed every year. Government only has one bullet left. In other words, if wrongly used, data will keep on belonging more to science fiction that to statistics, it will have to live with such cosmetics for a long time. That wouldn't be a problem, except for the fact that the International Monetary Fund (IMF) heavily pressures on that respect. With an intervened Statistics and Census Institute (INDEC), no agreement will be reached with Paris Club. IMF managing director, Dominique Strauss-Kahn, was pretty clear during his visit to the country for inauguration of Cristina de Kirchner. In the short term, INDEC December inflation would hit 1 per cent, far from the 1.7 per cent private analysts estimate.

Martín Lousteau
Martín Lousteau
Argentine economy minister Martín Lousteau has decided to postpone debut of the new Consumer Price Index.

In the first place, the official intention was to make January cost of living, disclosed during the first days of February, with the new methodology (without makeup). The truth is that there's no set date for it: "We don't want to use the bullet: the idea is that, when the new index is launched, it's believable to everyone's eyes," official sources stated.

Market used to have the impression that government would gradually make price variation opener. The first step in that sense would have been 0.9 per cent of retail inflation in November, higher than the 0.7 per cent some economists expected. Even that caused indexed bonds to rise, which adapted their yields to hopes of less cosmetics in 2008: no longer an 8.5-per cent inflation, rather closer to 10 per cent. In parallel, such gradual openness walked together with hopes of a reduction in real inflation. This means that, month after month, the wide gap between INDEC's CPI and real price variation was going to shrink.

Now all efforts are devoted to freeze such strategy, according to reports. Lousteau himself hinted at it in one of his TV interviews, by holding: "Until we haven't tested the index's soundness, we won't set it in motion." No date has been set and it's neither urgent.

In between, such strategy could be useful for an inflation decrease, so that, when showing the new index, there's no need to recognize and digest high values. If the index is going to be cleared, it'd rather be when inflation is under control. But, will it be in any moment of 2008? Difficult forecast till not seeing changes in government's fiscal and monetary policy.

For the time being, things won't be easy in January. INDEC will have to recognize a higher price hike, regardless of all cosmetics used, after an increase in transportation. The economic team stresses that November's 0.9 per cent was not a sign: that's what actually came from INDEC. Translation: no less spices have been added to the task that INDEC has been carrying out since January this year.

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