Argentina inflation

Whatever the result of Argentina’s presidential election later this year, the country will be in a different place a year from now with a new and more pragmatic government running the country. All the main contenders for president in the next government have similar ‘four pronged’ approach to address Argentina’s economic problems. Investors should look through this election ‘noise’ and towards the new government’s coming macro-economic reforms which we believe will usher in a new Argentina.

The era of Cristina Fernández de Kirchner, president, is set to be remembered as a strange epoch that began with default and ended with default. The Kirchners oversaw the restoration of order in Argentina after the chaos that accompanied the 2001 default, but then became bogged down by unnecessary confrontations and economic mismanagement. Read more

Confused about what’s going on in Argentina? If so, don’t fret – you’re not the only one.

In the space of a day, Argentine debt was upgraded by Bank of America and downgraded by Moody’s. More baffling still, they cited much the same reasons – the level of reserves at the central bank. Read more

Eat humble pie? Not a crumb. After lying about inflation for seven years, Buenos Aires last night revealed a new and more credible statistical series. This, said Axel Kicillof, the economy minister (pictured), was not because the old inflation numbers were wrong. Rather, it was because they needed to be updated. Why? Because Argentine consumption habits had changed, he explained. The government’s new inflation numbers, he added, provide “an X-ray of another country.” Read more

Move over Repsol. The government in Buenos Aires is now directing its stinging verbal attacks at Shell.

After Argentina devalued the peso, consumer prices have begun to rise – a logical consequence. Or not – Cristina Fernández, the president, likened retailers and suppliers that have hiked prices to pilferers on Tuesday night.

And her ministers have taken specific aim at Shell, the oil company also accused by Axel Kicillof, the economy minister, of a “speculative attack” on the peso during its preliminary dive on January 22Read more

A timely new poll has come our way, commissioned by Graham Fisher & Company for the Emerging Markets Trade Associations, a collection of investors focused on debt. Poliarquía Consultores asked 1,000 Argentinians for their views on the economy, the problems facing the country and president Cristina Fernández de Kirchner.

The three biggest concerns for Argentines are crime, the economy and inflation and voters, the pollsters found, are unhappy with the way the government is tackling them. Read more

The tomato once enjoyed a quiet life in Argentina, mixed with lettuce and onion or grated carrot in a traditional accompaniment to a juicy steak. No longer. Today, it is at the centre of an economic ruckus involving a supermarket worker, President Cristina Fernández and her ministers. Read more

Nice car

Tough times for consumers in Argentina. Thanks to a 35 per cent tourist tax, many are swapping the white sands of Uruguay and Brazil for local beaches during January’s summer holidays (though the head of the federal tax agency found his way to a five-star hotel in Rio).

And now carmakers have begun to release prices under the impuestazo, a whopping new tax on top-end models. Read more

The bibs are back: printed with the slogan “we monitor the prices” and worn by young pro-government activists, the foot soldiers of Argentina’s losing battle against soaring inflation.

After announcing the measure alongside its bibbed army of supporters, the government implemented a new set of price controls on Monday, a precursor to its annual war with union leaders over wage rises. Read more

Guillermo Moreno is at it again. Argentina’s business community lives in perpetual fear of receiving a telephone call from the government’s notorious commerce secretary. But he reserves special treatment for economists.

This time it is the turn of Orlando Ferreres to be investigated, after he had the temerity to publish an inflation index that differed drastically from the government’s widely-questioned figures (he thinks prices are rising more than twice as fast). Read more

Picasso famously had his blue period. Argentina has its blue dollar – as the black market exchange rate is known. And that’s good news for art collectors and visitors to the ArteBA art fair which kicks off this week.

Managing Argentina’s de facto multiple exchange rates is itself a fine art. But now art itself, among other things, has suddenly become cheap – provided people don’t use the official rate. Read more

What’s that phrase? If you’re in a hole, stop digging?

Hernán Lorenzino, Argentina’s economy minister (left), abruptly terminated an interview with a Greek television journalist, Eleni Varvitsioti, after she pressed him on the tricksy issue of inflation in ArgentinaRead more

Argentines would love to save in dollars rather than a peso ravaged by inflation and whose value is on the skids, but the government won’t let them.

Demand for gold – another traditional safe haven – has surged. Banco de la Ciudad, the only bank to sell to individuals, says it can hardly keep up.

So … Enter the bitcoin? The virtual currency is emerging as the latest inflation refuge – and Bloomberg reports that TradeHill, a US-based bitcoin exchange, is now planning to open an office in Argentina where demand is fastest in the region. Read more

Is “no gracias” to Visa and Mastercard on the cards in Argentina?

The possibility of supermarkets only accepting a new supermarket credit card (valid for use in all big chains, the thousands of Chinese-run neighbourhood stores, some electronic and white goods retailers and even petrol stations at YPF, the state oil company) sparked a slew of headlines over the weekend in Argentina.

The idea came up last Friday at a meeting with Guillermo Moreno , the internal trade minister. Read more

Argentina has an impressive ability, it seems, to bite the hand that feeds it: farming.

It’s an impression reinforced by Rabobank’s latest Argentine agribusiness outlook. Argentina’s farming sector, which makes up nearly 60 per cent of total exports ($47bn in 2012, and that was a bad year because of drought), is a key economic breadwinner, bringing home the dollars that are essential to an economically choppy country still with debt in default and cut off from international capital markets. Read more

King Canute commanding the waves to go back to Bosham

Inflation-hit Argentina has just agreed a new round of price freezes with major supermarkets, neighbourhood stores and white goods retailers until April 1.

Fine… except that even Cristina Fernández, the president, is sceptical that such accords actually work and even some of the participants see it as a futile, Canute-like exercise. Read more

The gap between how the outside world, and how the government, see Argentina, appears to be growing.

This week, Moody’s Investors Service downgraded its outlook for Argentina’s B3-rated peso and foreign-currency government debt from stable to negative, suggesting a full-blown downgrade may not be far away. The government couldn’t agree less. Read more

The head of Argentina’s government in the lower house of Congress last month made a telling remark. Julián Domínguez said Cristina Fernández, the president, “is the first to recognise the reality on the street”.

Well that must explain why she has hiked child benefit by 26 per cent then. Apparently it means that government itself now believes that inflation – which the state statistics office says is running at 10 per cent and which the government is budgeting at 8.9 per cent for 2013 – is higher even than the opposition says. Read more

Now that’s a nice raise! Or wait, maybe it’s just the rate of inflation.

On Tuesday evening, Argentine President Cristina Fernández de Kirchner announced that the country’s unions and business associations had agreed on a 25 per cent increase in the minimum wage, to be delivered in two parts. The monthly wage would rise from the current 2,300 pesos (about $494) to 2,670 pesos September 1 and then to 2,875 pesos in February. Read more

See no evil, hear no evil, speak no evil.

That, apparently, is the mantra of the Argentine government when it comes to inflation. And woe to those who contradict it. Just ask the folks at Consumidores Libres, a non-profit that tracks prices and represents consumers in consumer protection lawsuits. Read more

Argentina’s clampdown on foreign currency purchases has claimed another victim: peso-denominated bonds. Argentina’s inflation-linked peso bonds have lost an average of 15 per cent so far this year, reports Bloomberg, quoting data compiled by Barclays.

On the surface, the bonds certainly look attractive. The inflation-linked Argentine bonds due in 2033 yield 14.3 per cent plus the official annual inflation rate, according to Bloomberg. But that plus is the problem. The annual inflation rate as reported by INDEC, the national statistics agency, sits at 9.9 per cent. But many private economists say that INDEC has woefully underreported inflation since the Argentine government intervened in INDEC in 2007, and that the current annual rate is closer to 25 per cent. Read more