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Thursday, March 13, 2014

February inflation likely close to January’s

Opposition lawmakers present their inflation index yesterday.
By Francisco Aldaya
Herald staff
Economists largely agree price increases will begin to slow down in March

As the government gets ready to release its inflation estimate for February, there is widespread agreement that the consumer-price index that will be published by the INDEC statistics bureau on Monday will clock in at close to the 3.7 percent that was posted for January.

Opposition lawmakers in Congress published their highly questioned CPI statistics yesterday, calculating that prices rose 4.3 percent while continuing to publish the average of calculations reached by several consultancies that reportedly fear reprisals for doing so themselves. Last month, the lawmakers’ 4.6 percent was 0.9 percentage points higher than the INDEC’s official inflation for January of 3.7 percent which was published the next day.

Even as there is disagreement over whether inflation was higher or lower in February when compared to January, there is consensus that the government-sponsored price agreements had an insignificant effect on inflation.

Devaluation, seasonality

Among the factors that affected the CPI throughout February were the lingering effects of January’s sudden devaluation and the private sector’s traditional start-of-the-year price adjustments, UBA economist Mariano Kestelboim told the Herald.

Almost all experts forecast that inflation will decelerate in the next few months as result of the ongoing contraction of pesos in circulation due to the Central Bank’s hike on interest rates, which catalyzed their absorption into fixed-rate deposits, among other credit schemes.

“Expect high inflation in February, but much lower in the following months, at least for a couple of months,” PRO lawmaker and economist Federico Sturzenegger told the Herald, adding: “it’s very simple, monetary contraction will keep the dollar on track.”

Sturzenegger yesterday explained the opposition would have to keep running its numbers in order to keep INDEC in check, with uncertainty remaining as to whether the bureau’s sharp turn toward credibility will be maintained hereon.

The government’s rate would “have to be higher than 4.3 percent” to be credible, because increases in prices in the interior — which the Congress CPI does not contemplate — were felt more than in Buenos Aires.

Alternative reports

Inflation of 3.2 percent was reported by Estudio Bein, headed by Miguel Bein, an economist who was recently praised by President Cristina Fernández de Kirchner for saying that market players had joined forces to force her administration to devaluate.

Bein’s report marks a significant drop to a more moderate number compared the 4.4 percent the consultancy calculated for January.

The Buenos Aires City government’s own CPI for February was in the vein of Congress’, weighing in at 4.4 percent, down from the 4.8 put forth for January.

IDESA consultant Jorge Colina also forecast inflation at “almost the same level seen in January.”

“The dollar has eased up and stabilized and interest rates are higher, so the rate will be lower in March,” he said, warning, however, that “although inflation has been controlled, it’s been at the expense of stagnating the level of activity.”

Latin American Economic Investigations Foundation (FIEL) also released its report on price fluctuations for last month, calling the opposition’s 4.3 and raising it by almost a percent point to 5.2.

Pushing Kicillof’s buttons

Kicillof argued over the weekend that “the IMF, among other foreign and national organizations, has participated in devising this index, (which) is very rigorous: the collection of data takes us all month, unlike these consultants that compete to see who can give the highest number.”

For the minister, such sectors “have made us grow used to this (process) of generating a sensation of economic catastrophe.”

On February 14, Economy Minister Axel Kicillof made journalists’ jaws drop as he uttered the latter figure, but it seems that INDEC’s second IMF-friendly federal CPI report will not be as shocking.

@franma1990
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