August 10, 2017 / 7:50 PM / 10 months ago

UPDATE 1-Argentina says nationwide inflation 1.7 percent in July

(Adds economic and political context, central bank targets)

BUENOS AIRES, Aug 10 (Reuters) - Consumer prices rose 1.7 percent in Argentina in July, government statistics agency Indec said on Thursday, below expectations for a 1.9 percent increase in a Reuters poll of analysts.

It was the second national reading since President Mauricio Macri took office in late 2015. Inflation in the greater Buenos Aires area - previously used as a proxy - was also 1.7 percent in July. For the 12 months through July, inflation in the greater Buenos Aires area was 21.5 percent, below 21.9 percent in June.

The better-than-expected reading should give the government some breathing room ahead of Sunday’s primary for legislative mid-term elections in October. The vote, in which former populist President Cristina Fernandez is vying for a Senate seat, is seen as a referendum on Macri’s free-market reforms.

Prices rose 13.8 percent in the first seven months of the year. The central bank is targeting inflation of between 12-17 percent for 2017, well below average analyst expectations in the most recent central bank poll for national inflation of 22.1 percent.

That would be around half of 2016 inflation of more than 40 percent. (Reporting by Hernan Nessi; Writing by Luc Cohen; Editing by Chizu Nomiyama; editing by Diane Craft)

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