Over the past 50 years, Argentina has often achieved the highest inflation rate in the world. Recently, there has evolved a severe disagreement between politicians and business executives regarding the publication of data and research of inflation levels. Businesses (and researchers) want accurate reporting so that they can adjust their prices and forecasts accordingly. However, higher inflation numbers have severe economic repercussions for government, since there were commitments made to adjust many government payments. In the budget, it makes a big difference whether the inflation rate is reported as 40 percent or as 8 percent.

In the country’s statistical office, between 2007–2015, the government replaced several statisticians, clerks, and field workers who collect consumer prices. Subsequently, starkly lower inflation figures began to be reported. Workers at the National Institute of Statistics protested Argentina’s miraculous declines in inflation and poverty rates. For example, the government numbers report an official poverty figure of 15.3 percent while the Catholic Church says it is near 40 percent.

Such discrepancies lead to controversy. Economists and political analysts say the allegations hurt the country’s credibility in terms of investments.

Questions

1. Who is right—the accuracy side, which is said to be particularly short term oriented, or the adjustment side, which claims there are other things than just numbers to worry about?

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Deflating inflation Argentina's consumer prices % change on a year earlier 2008 Unofficial 09 10 11 Official (old) 12 13 14 30 -25 20 15 10 5 0