Regardless of whether or not INDEC statistics bureau’s announcement of April inflation was the last with the old methods, it was as bad as ever (or even worse, given that the March figure at least conceded that inflation had topped one percent). Not only was April inflation downsized to an absurdly low 0.8 percent but soaring food prices were posted even lower (0.7 percent) with garments (1.6 percent) and housing (1.4 percent) the main culprits for whatever inflation was recognized. The annual inflation rate thus remains within single digits at 8.9 percent while we are asked to believe that prices have only risen 3.4 percent so far this year. Wholesale inflation of one percent limits the inflation in the pipeline for June even though taxi fares have just been hiked 22.5 percent as from next month. Last week President Cristina Fernández de Kirchner implicitly admitted to the inflation problem by blaming it on those who set the prices in general (a simplistic approach) and the agricultural sector in particular but INDEC has refused to give the president much ammunition to substantiate her charges, stubbornly clinging to the same old ways of minimizing inflation data.
Nevertheless, these bad old ways are set to change, according to a press conference given by INDEC last Wednesday. Unfortunately, the credibility of these new methods was undermined from the outset because they were announced by the current INDEC chief Ana María Edwin and Beatriz Paglieri (the INDEC director with the worst reputation for data manipulation) alongside Cabinet Chief Alberto Fernández. The new methods, which purport to cover two-thirds of the Argentine population and three-quarters of all goods and services, are said to be the result of consultation with six nations (the United States, Spain, Brazil, Uruguay, France and Mexico) but there was no sign of any of this international co-operation at the press conference nor any representatives of consumer watchdogs. Instead, INDEC might be offering brand-new methods but they have the same old allies — Domestic Trade Secretary Guillermo Moreno (now proposing a “price truce”) and the pickets who are offering to muscle prices down.
Inflation has now become far more than a headache for the everyday shopper. The whole basis of the economic model in a “competitive” exchange rate is being undermined by the dwindling peso, antagonizing industry as well as agriculture — the reaction of many industrialists is to press for a new devaluation (up to 4.5 pesos per dollar) but this would only set a further inflationary cycle into motion. Even with the sanitized April inflation figure, the poverty line rises to 987 pesos, dangerously close to a minimum wage of 1,000 pesos which almost seemed excessive only a few months ago. The CGT and the trade unions, who see themselves purely as the victims of inflation rather than as one of its causes with their wage demands, are bound to step up pressure to increase the minimum wage (and also the income tax exemption ceiling). Against the hope that the situation will be self-correcting as growth falters is the growing global trend toward inflation (see the international editorial immediately below) — a trend where even the official inflation data (never mind the hidden truth) mark out Argentina as a world leader beyond the likes of Zimbabwe.
|
