Argentina shelves inflation revamp after statistics chief quits

President Javier Milei’s government announced it’s holding off on using new methodology to measure inflation, just hours after Argentina’s chief statistician resigned from his post.

Marco Lavagna stepped down as head of the INDEC national statistics agency on Monday morning, without giving a reason. Milei’s economy czar later said it was because of a disagreement over the timing of the rollout. 

“Marco had envisioned the implementation date now. And with the President we always had the vision that the change should be implemented once the disinflation process was totally consolidated,” Economy Minister Luis Caputo told a local radio station Monday afternoon.

Caputo said changing the methodology now could have led to speculation that the statistics were manipulated, despite some estimates that the next batch of inflation figures could come in higher as a result of the new formula. 

Argentina is set to publish January consumer price data next week, and the Central Bank had warned the new methodology – among other factors – would create “uncertainty” in the outlook.

The overhaul would have taken into account a revamped index that was expected to show some consumer price gains running higher than current monthly readings. Services, like utilities and rent, weighed more heavily in the new methodology, while food had less impact. 

The government expected the impact of the change to be “very low,” Caputo said, adding that Lavagna acknowledged as much. The outgoing statistics chief didn’t respond to a request for comment.

Caputo didn’t say when the new methodology would be rolled out. Pedro Lines, one of Lavagna’s deputies at the agency, will take over as director, the economy minister added.

Monthly inflation is expected to come in around 2.5 percent, Caputo said in an earlier interview Monday. The pace of disinflation faces temporary risks in the first quarter of the year, the central bank warned last week, citing persistently high beef prices and increases to utility bills in addition to the now-shelved new methodology.

Price gains accelerated for a fourth consecutive time in December to 2.8 percent, led by transportation, utilities and food. Annual inflation is still expected to drop to 20 percent this year from about 32 percent currently, according to economists surveyed by the Central Bank.

In the afternoon interview, Caputo said the government expected inflation to cool far more than it did by this time, blaming market volatility ahead of October’s midterm election.

Lavagna, an economist, took the reins at INDEC in December 2019 during the Peronist presidency of Alberto Fernández and stayed on under libertarian leader Javier Milei, whose main focus has been to tame soaring inflation. Like other parts of the public sector, workers at the statistics agency have complained about poor salary increases amid Milei’s austerity campaign. 

When INDEC was led by Guillermo Moreno, who was recently sentenced for manipulating inflation figures under former president Cristina Fernández de Kirchner, Lavagna ran a private consulting firm. The firm was fined by Moreno for publishing price figures that contested the government-reported numbers.

Lavagna is the son of Roberto Lavagna, who served as economy minister under from 2002 to 2005 under presidents Eduardo Duhalde and Néstor Kirchner.