Argentine Consumer Prices Rose 1st Time in 3 Months

Argentine consumer prices rose in July for the first time in three months as retailers marked up entertainment and travel prices for the holiday season.

The consumer price index climbed 0.4 percent after falling 0.1 percent in June and 0.4 percent in May, the National Statistics Institute said. Still, the rise is just a fraction of the 3.2 percent price surge in July 2002, underscoring how sluggish demand in the South American economy is preventing many retailers from raising prices.

Pelikan Holding AG’s Argentine unit, which makes pens and stationary, said it won’t pass on the higher costs from a 7 percent drop in the peso the past three weeks to clients.

“With poor local demand, we can’t,” said Sergio Pelliza, logistics manager at Pelikan, which imports 60 percent of its goods, in Buenos Aires. “We have to absorb the losses and keep a smaller profit margin.”

Banks’ reluctance to lend to consumers after last year’s currency devaluation, slow wage rises and a freeze on utility rates will keep inflation within the 15 percent to 20 percent target range that Argentina set in a deal with the International Monetary Fund, according to Dardo Ferrer, an economist at Fundacion Mercado in Buenos Aires Province. Consumer prices rose 7.3 percent in the 12 months through July, the institute said.


Gaston Amoros, an economist at Jose Luis Espert & Asociados consultancy in Buenos Aires, said prices rose last month as some companies boosted prices before Argentina’s winter holiday season because many people spend more on entertainment such as skiing and watching movies.

The 0.4 percent monthly increase in the price index was bigger than the 0.35 percent median forecast in a Bloomberg News survey of eight economists. The institute said producer prices were unchanged in July, leaving them up 3.3 percent from July 2002.