In Argentina, outdated goods still dominate the consumer price index, prompting calls for a much-needed update under President Javier Milei. Economists believe that a revised index would show higher inflation rates than the current reported 2.5 percent. Amid ongoing public skepticism about official data, the government’s approach to inflation remains vital ahead of midterm elections. Observers stress the need for updated measurements to align with current consumer behavior and restore confidence in economic statistics.
In Argentina, consumers still rely on outdated items like newspapers, cigarettes, and landline phones, which form key components of the government’s consumer price index. This has prompted calls for President Javier Milei to update the index for the first time in twenty years to include modern staples like iPhones and Netflix subscriptions. Most economists argue that a revised index would likely reflect a higher inflation rate, contrary to the current monthly reading of approximately 2.5 percent.
The current inflation stance of approximately 66.9 percent annually, a substantial improvement from the previous year’s figure of 276.2 percent, complicates matters for Milei’s government. A revision to the index could jeopardize the government’s perceived success in curbing inflation, which is pivotal ahead of the upcoming midterm elections. Additionally, an updated index could necessitate higher payments on inflation-linked bonds, which are a primary financing method for the government.
Given Argentina’s historical context of rampant inflation, citizens harbor skepticism regarding official data. A decade-old scandal involving deliberately misreported inflation figures has further instilled doubt. Many individuals contend that actual price increases surpass the official data, as articulated by Ángel Santos, a Buenos Aires resident, who remarked, “Inflation is going down, but prices keep rising.”
Recent polling indicates that inflation continues to be a pressing concern for Argentines, with 42 percent citing it as the principal issue facing the country today. Labour unions assert that actual inflation rates are significantly higher than reported, estimating a variance of 10 to 22 percentage points. INDEC Director, Marco Lavagna, announced plans for an updated basket of items, emphasizing the need for careful implementation without substantial alterations to the overall index.
There is additional concern regarding the low representation of services in the inflation index. Essential services such as healthcare, education, and digital subscriptions receive insufficient focus, despite their growing importance in consumer spending patterns. Data from INDEC shows that prices for outdated products align with official inflation, yet essential services have dramatically outpaced grocery price increases.
Lavagna intended to revise the methodology of inflation measurement as part of a new household expenditure survey, which would align Argentina with international standards. This included expanding the sample size to encompass around 500,000 prices. However, the initiative has been stalled, leading analysts to warn that the lack of an updated basket will keep the official inflation figures disconnected from the reality faced by consumers.
The persistence of outdated items in Argentina’s consumer price index has necessitated calls for a revision to better reflect contemporary spending patterns. While the government has made progress in reducing inflation rates, many citizens express skepticism regarding the accuracy of official data. The lack of alignment with modern consumption habits underpins persistent economic concerns. Moving forward, an updated index will be critical in providing a more accurate picture of inflation and restoring public trust in economic statistics.
Original Source: www.batimes.com.ar
