BUENOS AIRES, (Reuters) – Argentine economists vow to resist a government crackdown on their independent inflation estimates and accuse President Cristina Fernandez of trying to silence critics before October’s election.
The methods used by the consulting firms, which report inflation at more than double the official rate, are being picked apart by the same state statistics office accused of fudging figures since 2007.
The consultants face fines of up to 500,000 pesos (about $120,000) if the government decides the publication of their figures violates a law on deceptive commercial practices.
“It’s an election year and the inflation issue is hovering. I think by pressuring those who measure or estimate inflation, they’re trying to take this off the economic agenda,” said Dante Sica, head of abeceb.com, which is being investigated.
Rising prices are a weak spot for Fernandez, who will likely run for re-election this year. She has defended state data and almost never utters the word “inflation.”
Jorge Todesca of Finsoport, another consultant targeted by the government, said he would fight the investigation.
“We aren’t going to pay any fines. We will take this to court and we expect to win,” said Todesca, who plans to run for mayor of Buenos Aires on an opposition ticket.
Private estimates put inflation at around 25 percent last year. The INDEC statistics institute reported a 10.9 percent rise. The government is accused of lowballing inflation to reduce debt payments and for political gain.
Last month the government’s price watchdog, Domestic Commerce Secre-tary Guillermo Moreno, sent out a 19-point questionnaire to consultants. It included queries on how they gauge prices for prepared foods, lodgings and household staff.
Several consultants have already received a second round of correspondence, demanding more details on their data-gathering or threatening them with additional fines for not responding.
“We sent the first response and they said we’d done everything wrong, which we knew they’d say. Now we have ten days to respond to another series of questions,” said economic consultant Orlando Ferreres.
“This doesn’t happen in any other country … They’re saying you can’t publish what you calculate,” he added.
government had slapped the maximum penalty on Ferreres’ firm, but he said they were not notified of any fines.
Todesca called the erroneous report “malicious” and said it was meant to intimidate. He also said Moreno is demanding that consultants identify judges who use private inflation estimates to calculate awards for child support or back wages.
“Now they’re not just going after me, they’re also meddling with the judiciary,” he said.
Fernandez’s late husband and predecessor, Nestor Kirchner, replaced the head of the INDEC’s consumer price index (CPI) unit with a political ally in January 2007. Government data has come in below private estimates ever since.
Government officials deny there is an inflation problem in Argentina — even as state employees get annual wage increases upward of 20 percent and provinces report rising costs.
Cabinet Chief Anibal Fernandez said over the weekend that the consultants “are all liars,” adding that they would need an army to be able to measure inflation properly.
“The government asked them how they calculate (inflation) and their responses were embarrassing,” he said.
Private economists readily admit they cannot compete with the INDEC’s resources. But they say they must try to gauge inflation in the absence of reliable official figures.
“The government’s objective is to eliminate all the alternative CPIs, or make sure they aren’t published, so there’s just one voice,” said Graciela Bevacqua, who headed the INDEC’s consumer price unit until Kirchner ousted her.
She said the probe could prompt some economists to stop reporting their inflation estimates. But she vowed to keep publishing her team’s calculations for free.
“I want to continue with this. If I start getting death threats, then I’ll reconsider,” she said.
