Argentine inflation data questioned even after reforms

miércoles 7 de mayo de 2014 14:34 GYT

* Data still lags private estimates, undermines credibility

* Investors need accurate price data to evaluate risks

By Hugh Bronstein

BUENOS AIRES, May 7 (Reuters) - When Argentina revamped its consumer price index this year investors were relieved that Latin America's No. 3 economy was trying to win back the trust of financial markets after years of blatantly underreporting inflation.

Shunned by the global bond market for more than a decade, Argentina unveiled a new consumer price index (CPI) as part of a push to reestablish international credit and bolster central bank reserves after a more than 30 percent fall last year.

But the new index continues to clock inflation at well below analysts' estimates and the government has stopped listing the products measured, raising questions over how much the data is being dragged down by price controls that the administration puts on scores of food and household items.

"We are not sure how far the deformation of data goes because the government does not publish a list of the 520 products included in the index, so we do not know how many of those products are subject to price caps," said economist and former central bank chief Rodolfo Rossi.

From 2007 through 2013 Argentina's CPI reflected little more than the opinion of the government's former price czar Guillermo Moreno. A pugnacious defender of President Cristina Fernandez's inflationary fiscal policies, Moreno was known for trying to strong-arm retailers into keeping prices down.

In those years, Argentina reported inflation at about half the rate estimated privately. The discrepancy hurt confidence in the government, widened Argentina's sovereign risk spreads and got the country censured by the International Monetary Fund.   Continuación...