Argentina’s Inflation Data Problems

Brian Sturgess - February 2014

Speed Read
  • Argentina has published its new consumer price index showing prices rose in January 2014 by 3.7% compared to unofficial estimates of 4.1%
  • The government has manipulated official economic inflation statistics since 2007, but following IMF censure it has been forced to produce a new series.
  • The IMF has yet to accept the new series which will be reviewed, but pressures will grow on the government since distorted inflation statistics impacts on a large number of other indicators such as the poverty rate.
  • Data from the World Price Index published by World Economics based on a sample of the cost of purchasing a basket of goods available online indicates that Argentine prices rose by 5.7% in January and that the rate of inflation is accelerating.

Inflation Estimates

There is still much uncertainty about the rate of inflation in Argentina despite the launch of a new official index the National Urban Consumer Prices Index, NUCPI on February 13. The consensus among economists is that it is accelerating, but the real question is by how much?

The newly released official data showing a month on month rise of 3.7% in January would suggest an extrapolated annual rate of inflation of 55% up from 10.9% reported for 2013 on the basis of a now replaced discredited methodology. Unofficial monthly estimates published by the Congressional Index, (a price index released by opposition legislators based on a collection of academics and private consultants) suggest that the rate of inflation in January was higher than the official index, at 4.6%. However, the Argentine price data contained in the World Price Index, a monthly product published by World Economics, estimates an even higher level of 5.7% for that month. This would indicate an extrapolated annual rate of 94% which could place further pressure on the country’s currency and upon the government.

Official Inflation Data
Argentina’s government new Consumer Price Index was created with the assistance of the IMF after the international body had censured the country for alleged manipulation of its official economic statistics. The country’s inflation statistics have been distrusted since January 2007 when then President Nestor Kirchner enforced senior staff changes at the National Statistics Institute (INDEC)[1] and a new methodology for compiling the consumer price index. Since 2007 several academic and private analysts have estimated that the actual CPI has been considerably higher than the one reported by the official series. In consequence there have been accumulating gaps between the official estimation of inflation and alternative ones and this also distorts the measurement of other important economic indicators, such as the poverty rate and the distribution of income.  The impact of these additional distortions on other economic statistics has been investigated in detail by Coremberg (2014). The difference between official inflation and unofficial estimates are shown in Chart 1.


Poverty statistics are linked to official estimates of inflation since households unable to afford a basic basket of goods and services including food, education, transport and clothing are considered below the poverty line. Those unable to afford even the food basket calculated by INDEC, the official statistics agency, are considered indigent. The data on poverty has not been re-launched at the same time as the new index and since unofficial poverty estimates have been twice as high as the government’s, it is possible that this data will be manipulated separately or dropped.


The World Price Index (WPI) Estimate
Another means of estimating inflation in consumer prices is through surveying online prices of a basket of goods. A study by Cavallo (2012) collected data between October 2007 and March 2011 from the largest supermarket in Argentina, Brazil, Chile, Colombia, and Venezuela. In the last four countries online price indexes approximated both the level and main dynamics of ocial inflation. However, in Argentina the online inflation rate was nearly three times higher than the ocial estimate.  Research by World Economics also suggests that inflation is higher than official estimates. [2] The World Price Index (WPI) measures the value of an urban selection of goods and services at purchasing power parity, reflecting the real purchasing power of different nations, allowing for rapid and accurate international price comparisons. The index was launched in 2010 for the ten largest countries in the world measured by GDP, but it has subsequently expanded and now covers the top 15 largest economies and Argentina. A full report on the methodology and purpose of the WPI is available from the World Economics website. [3]The first WPI data for Argentina allowing a month on month estimate of inflation in the cost of purchasing the basket of goods was published in April 2013. The month on month inflation rate is shown in Chart 2 which shows the rate of price increase of the WPI basket rising from 5.7% in January to 16.1% in February. This picture of accelerating inflation is confirmed by the latest research on inflation expectations in Argentina published by the University of Torcuato di Tella in Buenos Aires which shows a sharp rise in the median rate of inflation expectations to 35% in February.

Is the problem fixed?
The new consumer price index monitors the prices of a basket of 520 goods and services, including food, drinks, clothing, housing, appliances, health care, transportation, communication, recreation and education across the entire country. The old official index only measured prices in metropolitan Buenos Aires and surrounding districts. The methodology behind the new index is published on the INDEC website, [4] but the IMF has not yet approved the new method. It simply commented that it will “take note” of the new figures, but a senior IMF executive commented that "the publication of the new index was an action stipulated in the Executive Board of Directors' decision" and stated that the issue would be "examined" in the coming months. [5] The inflation rate estimates calculated by the World Price index suggest that the government’s new index may still be underestimating price rises. With inflation accelerating and the currency under pressure the government will have to resist the temptation to manipulate the data in its new index. 



Cavallo, A. (2012), Online and Ocial Price Indexes:Measuring Argentina’s Inflation, Massachusetts Institute of Technology.

Coremberg, A. (2014) Measuring Argentina’s GDP Myths and Facts, World Economics,