Argentina’s outdated consumer price index, reliant on obsolete items, has prompted calls for a significant update by President Javier Milei’s government. Economists predict that revising the index could reveal higher inflation rates than currently reported. Public skepticism towards official statistics affects perceptions of inflation, with rising costs impacting everyday life. The lack of revisions to inflation methodology raises concerns about the accuracy of economic indicators going forward.
In Argentina, the consumer price index (CPI) remains anchored in outdated items, such as cigarettes, newspapers, and landline phones. President Javier Milei’s government faces increasing pressure to update the index for the first time in twenty years. Economists broadly agree that a revision would likely reveal a higher inflation rate than the official monthly figure of approximately 2.5 percent, given that regional indicators often report higher rates.
As Milei navigates his economic policies ahead of midterm elections scheduled for October, any adjustments to the CPI might pose risks. Annual inflation, according to INDEC, declined substantially to 66.9 percent in February from previous highs of 276.2 percent, strengthening Milei’s standing. However, altering the index could threaten this perceived victory and result in increased payouts on inflation-linked government bonds.
Public skepticism towards official inflation data persists due to a prior scandal wherein government directives altered consumer price reporting. Many citizens believe their experiences contradict the statistical reports. Ángel Santos, a building superintendent, articulated common sentiments, stating, “Inflation is going down, but prices keep rising,” highlighting personal challenges such as the rising costs of food and health care.
A recent poll indicated that high prices remain a pressing concern for many Argentines, with approximately 42 percent identifying inflation as the country’s chief issue. Labour unions assert that the actual inflation rate deviates significantly from official numbers, suggesting a difference of 10 to 22 percentage points.
The INDEC Director, Marco Lavagna, announced updates to the basket were in the works but stressed the need for caution in implementing these changes. With the current representation of essential services underwhelming, criticism arose regarding the weightings in the index. Carolina González, an economist, noted, “There was an improvement in purchasing power that led Argentines to consume more services in relation to food.”
Despite the observed inflation in outdated items aligning with headline inflation rates, critical sectors such as renting, utilities, mobile service, and public transport have surged disproportionately. Lavagna’s exploratory efforts to revise inflation measurement methodology aimed to conform to international standards but have yet to advance. Analysts caution that failure to adopt an updated basket of goods could maintain significant discrepancies between official inflation figures and economic reality.
In conclusion, the pressure mounts for President Milei’s administration to revamp Argentina’s consumer price index, reflecting contemporary consumption patterns. An outdated index may obscure the true inflation rate and undermine public trust in economic data. As economic challenges persist, updates to the CPI could better align with the current realities faced by Argentines, ultimately influencing government policy and public sentiment.
Original Source: www.batimes.com.ar
