Argentines would like to buy at “official” inflation and be paid in real inflation
According to Argentina’s statistics office Indec consumer inflation was 0.7% pushed mostly by the cost of clothing. However private economic consulting offices estimate the index was double the official announcement.
Indec inflation in the last twelve months reached 9.7% and 4.7% in the first half of 2011. But the so called Congress inflation index released on Wednesday was 1.52% and totalling 25% in the last twelve months,
The wholesale prices index in June was 0.9% and 6.1% so far this year. The cost of construction has risen 0.7% and 6.3% in the first half of 2011.
The consumer inflation item which had the highest impact in June was clothing with 1.7%, followed by home equipment and maintenance, 1% and transport and telecommunication, 0.8%
Food and beverage; education and housing and basic services increased 0.6% while medical attention and health care, 0.5%. According to Indec in the food item, peppers soared 14,.2%; lettuce, 6.9% and tomatoes, 6.8%. On the other extreme oranges were down 19.6%; lemon, 10.2% and carrots, 6.3%. Fruits overall increased 1.6% in June; dairy and poultry produce 0.7%; cooking oil, bakery and vegetables, 0.6% and beef, 0.4%.
“Items which represent 62% of the basket suffered an increase of 0.9% while services which represent the remaining 38%, experienced a variation of 0.4% compare to the previous month (May)”, said the Indec report.
Argentine central bank purchases 500m dollars to stop appreciation of the Peso
The Argentine Central bank has purchased so far this week 500 million US dollars to ensure that the country’s exporters retain a favourable exchange rate and importers are not that tempted to buy foreign goods.
This is exactly the opposite to what is happening in the three other Mercosur full members, Brazil, Uruguay and Paraguay, which have been literally ‘flooded’ with dollars causing a strong appreciation of local currencies and a boom of imports.
Following the intervention the central bank has managed to keep the US dollar ‘flat’ at 4.10 and 4.15 Pesos, sale and purchase, while the local currency is not forcibly appreciated because of the influx of foreign capital, from exporters and from assets looking for better profitability than in developed countries.
Earlier this week the Central bank doubled the average amount of US dollars it was purchasing in support of the greenback. Last Friday the bank purchased 35 million dollars; on Monday, 30 million; Tuesday, 100 million; Wednesday, 180 million and Thursday, 150 million.
