Argentina’s statistical agency INDEC reported an unexpected acceleration of inflation for the fifth consecutive month in January, recording a 2.9% monthly increase primarily driven by rising food costs, restaurant prices, hotel rates, and utility bills. The announcement comes amid intense scrutiny of the agency’s outdated measurement methodology, which continues to utilize consumption patterns from 2004—a formula that includes obsolete items like DVDs, newspapers, and landline phones while excluding modern essentials such as streaming services and smartphones.
The controversy deepened when President Javier Milei’s administration abruptly reversed plans to implement an updated inflation index, prompting the resignation of Argentina’s national statistics chief and triggering significant market reactions. The decision revived painful memories of previous governments’ manipulation of economic data, particularly during the Cristina Fernández de Kirchner administration when INDEC was accused of systematically underreporting inflation figures.
Economists argue the current methodology substantially underestimines actual price increases, especially regarding public services that have seen dramatic cost surges following Milei’s austerity measures and subsidy reductions. The political fallout has rattled investor confidence and sparked widespread public debate in a nation particularly sensitive to inflation reporting due to its history of economic instability.
Despite the statistical controversy, Milei’s government has achieved notable progress in reducing annual inflation from over 211% in late 2023 to 31% last year through aggressive spending cuts, increased Chinese imports, and controversial exchange rate policies. However, recent months have shown inflation trending upward again from its low of 1.5%, raising questions about the sustainability of these gains amid stagnant wages and ongoing economic challenges.
Paradoxically, the higher-than-expected January inflation figure provided some reassurance that the current administration isn’t manipulating data, as the 2.9% rate exceeded most private sector estimates and demonstrated statistical transparency despite methodological shortcomings.