Doubts on price data grow in Argentina

The sacking of the official in charge of Argentina’s consumer price data has stirred fears the government could manipulate figures, but major market impact is not expected, economists said on Thursday.

Beatriz Paglieri, a public servant close to Economy Minister Felisa Miceli and to government price watchdog Domestic Commerce Secretary Guillermo Moreno, was chosen this week to replace Graciela Bevacqua, Clarin newspaper reported.

Bevacqua was in charge of compiling price data at the Consumer Price Index Office, known by its Spanish-language acronym INDEC.

"It’s shameful that because of the high temperature of inflation shown by the price indexes they are going to be manipulated," said Jose Luis Espert, an economist.

"The manipulation up until now was sophisticated compared to what’s coming. Now it’s going to be blatant, they’re going to directly put the number the president wants," Espert said.

Economy Minister Miceli told reporters Bevacqua was let go for "functional" reasons and said "we have no problem with the INDEC indices."

"I don’t understand why a minister has to be informed about the change in a fourth-ranking functionar," she told a Clarin newspaper reporter who asked her on Wednesday whether there was a danger that inflation data would lose credibility.

With the Argentine economy expanding faster than 8.0 percent a year for four years, the government has adopted a number of controversial measures to tame inflation, including striking price-freeze accords with companies, imposing a temporary beef export bans, and tightening controls on sensitive goods like diesel fuel.

Media and brokerage reports have forecast January inflation could come in as high as 1.5 percent due to a big jump in private medical insurance costs, and speculated that Bevacqua lost her job in discussions over how to measure that rise.

The government is scheduled to release January inflation data on Monday, Feb. 5.

Argentina’s consumer price index rose 9.8 percent in 2006, down from 12.3 percent a year earlier, and experts forecast inflation this year of between 9.5 percent and 12.0 percent.

Economist Aldo Abram said the change at INDEC meant long-term investors will have a lot more uncertainty because inflation forecasts will be unreliable.

"The first cost is the great uncertainty that hangs over all the bonds and investment instruments that we have in Argentina linked to (inflation). Investors will lose money because of something that is untrue," he said.

Prices of inflation-linked Argentine debt fell on Wednesday on the news, but some market watchers said they did not expect more volatility.

"Our sense is that nothing is going to happen. There was not a change in the price trend and the numbers work even if inflation is a point lower," said Antonio Cejuela, research head at Puente Hermanos brokerage.

"I’m not saying this INDEC change is a yellow light for the market, but it is like saying that you want to put pressure on an institution that had maintained independence. That affected public debt," said Guido Tavelli, a trader with Tavelli and Company.

Picture of José Luis Espert

José Luis Espert

Doctor en Economía

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