VZCZCXYZ0002
RR RUEHWEB

DE RUEHBU #2112/01 2982012
ZNR UUUUU ZZH
R 252012Z OCT 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 9567
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6652
RUEHCV/AMEMBASSY CARACAS 1562
RUEHMN/AMEMBASSY MONTEVIDEO 6862
RUEHSG/AMEMBASSY SANTIAGO 0870
RUEHBR/AMEMBASSY BRASILIA 6530
RUEHLP/AMEMBASSY LA PAZ OCT SAO PAULO 3574
RUEHRI/AMCONSUL RIO DE JANEIRO 2393

UNCLAS BUENOS AIRES 002112 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
LABOR PASS ETAYLOR 
PASS NSC FOR MSMART 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
TREASURY FOR MMALLOY, LTRAN 
DOC FOR 4322/ITA/MAC/OLAC/PEACHER 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ECON EFIN AR
SUBJECT: ARGENTINA'S INFLATION DEBATE CONTINUES; ADOPTING U.S. CPI 
METHODOLOGY? 
 
Ref:    (A) Buenos Aires 2021 
        (B) Buenos Aires 1545 
        (C) Buenos Aires  247 
 
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Summary 
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¶1. (SBU) Amidst continuing accusations of GoA manipulation of 
inflation statistics, presidential candidate Cristina de Kirchner 
defended current statistics but said the government is studying 
adopting a new method of measuring inflation, "possibly the method 
of the United States."  She reiterated earlier accusations that 
independent predictions of 2007 inflation in the 15-20% range are 
election-linked, and misleadingly claimed that the IMF's own 
estimates supported lower official GoA inflation projections. 
Separately, national statistical agency INDEC released a provincial 
breakdown of September 2007 inflation that showed Mendoza province's 
inflation at 0.8%, equal to the announced national level.  However, 
the province's statistical agency released its own calculation of 
September inflation of 1.7%, double the GoA level.  A private poll 
of inflationary expectations reported that nearly six of every 10 
Argentine company executives think inflation is at least 16%, and 
one in three believes it surpasses 18%.  Senior INDEC officials are 
in Washington October 25-26 to meet with U.S. Bureau of Statistics 
and Census Bureau officials to study the US CPI methodology. 
End Summary 
 
--------------------------------------------- ----- 
September Inflation: Provincial Breakdown Released 
--------------------------------------------- ----- 
 
¶2. (SBU) Argentina's national statistics institute (INDEC) expanded 
on its earlier October 4 (Ref A) report that national consumer 
prices increased 0.8% MoM.  This index is calculated based on eight 
major urban areas in the provinces of Catamarca, San Luis, Mendoza, 
Tucumn, Cordoba, Santa Fe, the city of Buenos Aires, and the 
greater Buenos Aires area.  Interestingly, September inflation in 
Mendoza province, which is usually taken as a national benchmark, 
was also reported as 0.8% by the National Bureau of statistics. 
Julio Cobos, Mendoza governor and current vice presidential 
candidate with Cristina Fernandez de Kirchner had earlier announced 
that Mendoza's September inflation was going to come in at 1.7%. 
The website of the Mendoza provincial statistics bureau DEIE also 
clarifies that under the "usual" methodology, September's inflation 
in the province would have been 1.7%.  With this figure, annual 
inflation in Mendoza has accelerated to 23% from the 9.3% registered 
12 months ago, up 13.7% in a year. 
 
--------------------------------------------- ------- 
Cristina Kirchner:  INDEC's Numbers are "Real" But... 
--------------------------------------------- ------- 
 
¶3. (SBU) In October 24 statements to a radio journalist, Cristina de 
Kirchner said "inflation is a theme that should occupy us, but not 
preoccupy us."  Responding to questions about alleged GoA 
manipulation of INDEC statistics, she affirmed INDEC's inflation 
statistics are "real" and denied that the GoA's industrial model 
(which includes, inter alia, an undervalued peso and tariff and 
non-tariff barrier protection for domestic industry) generates 
inflation.  She reiterated earlier accusations that independent 
economists' predictions of 2007 inflation in the 15-20% range are 
linked to opposition candidates who wish to discredit the 
government, and noted that the IMF is also projecting 2008 inflation 
at the (relatively low) 12% level.  But Kirchner flagged a way out 
in the future by saying the government is studying "a new form of 
measuring which will possibly adopt the methodology of the United 
States." 
 
¶4. (SBU) The IMF ResRep (Protect) confirms that the IMF is 
projecting only/only INDEC's own 2008 inflation numbers, since as a 
matter of policy the IMF uses "official" government statistics for 
 
its calculations.  The ResRep believes that actual inflation numbers 
are likely substantially higher. 
 
-------------------------------------------- 
Business Leaders Estimate Inflation at 16.5% 
-------------------------------------------- 
 
¶5. (SBU) On October 23, a private survey on inflationary 
expectations of executives and managers at 160 companies by SEL 
Consultores, was released on Wednesday. The report noted that nearly 
six of every 10 company executives thinks inflation is at least 16%, 
and one in three believes it surpasses 18%.  "The loss of 
credibility in the official CPI is revealed by the fact that nearly 
no one believes inflation is below 10%, and also by the growing gap 
between what INDEC publishes and what businesses perceive as real 
inflation," the report stated. 
 
----------------------------- 
INDEC Officials in Washington 
----------------------------- 
 
¶6. (SBU) Local media reported on the October 25-26 visit of senior 
INDEC officials, including Director Ana Mara Edwin, and the CPI 
Team Leader Beatriz Paglieri, to the U.S. Bureau of Statistics and 
Census Bureau.  In local press reporting and in conversations with 
local private economists, both are seen as controversial political 
appointees who have strong ties to price control and inflation czar 
Internal Commerce Secretary Guillermo Moreno. On October 6, vice 
presidential candidate Cobos said that Argentina would adopt the 
U.S. CPI index methodology.  On October 9, INDEC released a 
statement -- with no prior consultation with the BLS or this Mission 
-- that INDEC would sign a technical cooperation agreement with USG 
counterpart agencies. 
 
¶7. (SBU) Post developed the following press guidance in conjunction 
with BLS to say we are only aware of plans for technical 
discussions: 
 
Q: We understand that INDEC officials have planned a visit this 
month to the U.S. to meet with USG statistical experts. 
 
-- We are aware of the planned visit.  Both the Bureau of Labor 
Statistics and the Census Bureau operate very active programs which 
are open to governmental organizations abroad who seek technical 
assistance. 
 
-- The Bureau of Labor Statistics (BLS), part of the Department of 
Labor, is one of the largest labor statistics organizations in the 
world.  Its Division of International Technical Cooperation has made 
itself available to provide technical assistance to countries and 
organizations around the world for over 50 years. 
 
-- The Census Bureau of the Department of Commerce has long provided 
technical assistance on population statistics to other countries. 
 
¶Q. What can you tell us about a possible bilateral agreement? 
 
-- The primary purpose of the visit is technical discussions. 
 
WAYNE