BUENOS AIRES, Argentina — Inflation in crisis-prone Argentina accelerated more than expected and for a fifth straight month in January, the country’s statistics agency said Tuesday, a closely watched report whose outdated methodology in recent days stoked political turmoil and created a headache for libertarian President Javier Milei.
Consumer prices rose 2.9% last month compared with December, said the statistics agency known by its Spanish acronym INDEC, largely owing to increases in the prices of food, restaurants, hotels and utility bills.
Economists say that the formula that INDEC used to calculate the inflation rate still underestimates real price rises in a country reeling from Milei’s harsh austerity program that his close ideological ally, U.S. President Donald Trump, has backed with $20 billion and championed as a model for downsizing federal bureaucracy.
After months of mounting pressure, Milei’s government said it would redo the index used in the official inflation reports, which is currently based on consumption habits from 2004 and reads like a time capsule: Cigarettes, newspapers, DVDs and landline phones are considered key to the “basket” of goods and services consumed by the population.
The old formula not only fails to reflect how much Argentine households spend on present-day staples like Netflix subscriptions and iPhones, experts say, but also underrepresents the costs of public services like health care and electricity that have skyrocketed as Milei slashes subsidies.
“It is very likely that the regulated public service prices in Argentina will see a strong increase this year, and the new methodology for measuring inflation will give those increases a lot more weight,” said Camilo Tiscornia, director of Buenos Aires consultancy C&T Asesores Economicos and a former central bank official. “The government is engaged in a fight against inflation, so this index doesn’t help.”
Milei’s economic team was expected to apply the new index for the first time in Tuesday’s report.
But last week, officials backtracked and announced that INDEC would carry on using the obsolete formula.
The move revived memories of blatant tampering with inflation statistics by past populist governments, rattling investor confidence and public trust. The country’s widely respected national statistics chief resigned and Argentina’s benchmark S&P Merval stock index tumbled several percentage points last week.
“With this decision, a Pandora’s box was reopened,” said Sergio Berensztein, who runs a political consultancy in Buenos Aires. “I know the officials of the economic team, they are in no way going to repeat the mistakes of the past. But the public, the market, investors, society, have every right not to trust.”
Elsewhere in the world, perhaps such a technical-sounding government decision would fall to the domain of data wonks and financial consultants. But it was the talk of the town in Argentina, a nation of amateur economists weaned on years of uncontrolled inflation and violent exchange rate volatility.
“It generated a lot of questions. These controversies are never good for public opinion,” said Ana Stupi, a 58-year-old lawyer heading home from work in Buenos Aires on Tuesday. “I hope that everything can be transparent so that this economic stabilization continues.”
Under former President Cristina Fernández de Kirchner, who succeeded her husband Néstor Kirchner in November 2007, Argentina was accused of doctoring data to