The Central Bank announced that, starting in August, it will publish its monthly market expectation survey (REM, by its Spanish initials) on inflation the same day the official numbers are made public. According to this new schedule, the next REM will be rolled out on August 15 — two days after this year’s presidential primaries and not before, as it was originally planned.
Before the announcement, the REM — which averages a variety of economic figures forecasted by 45 consulting agencies and banks — was published by the Central Bank every month, before the National Institute for Statistics and Census (INDEC) released the official inflation figure. In July, for example, it was published on the 7th, and the inflation number came out on the 13th.
According to a government source, the decision was made in June “due to mistakes made by the consulting firms in the inflation estimates of the previous months.” As it was, the source said, consulting firms had to “give their opinion based on the previous month’s inflation two or three days before the official data was released.”
“And they had been screwing up badly,” the source added — for instance, June’s monthly inflation was 6%, 1.3 points lower than the REM. The fact that the REM will be published the same day as the official inflation , said the source, means that the consulting firms “will stop forecasting past inflation and focus on the upcoming one.”
Inflation — which in July hit a record-high 115.6% year-on-year — is a hot topic in Argentine politics, and the candidate for the ruling coalition is the current Economy Minister, Sergio Massa. Some business leaders expect the recent surge in parallel exchange rates and the official announcement on new import taxes to hit prices this month.
A source from one consulting firm that is part of the REM who asked to remain unnamed told the Herald that the government expects July’s official inflation number — scheduled to be published August 15, two days after the primaries — to be lower than what the market is predicting.
“They did not want Massa participating in the primaries with an inflation [projection] that was worse than the actual number,” the source said. “In a context where the [expectation] is that the electoral results will be very tight, [the government] doesn’t want to give any kind of advantage.” A source from another consulting firm that also participates in the REM called the move “childish.”
Both consulting firms confirmed that they would keep participating in the REM despite the change in conditions.
One source ruled out the possibility that consulting firms are bad forecasters, considering instead that predicting inflation figures in Argentina is becoming “increasingly difficult” due to volatility and market interventions.
Juan Ignacio Paolicchi, chief economist at Empiria Consultores — which is also part of the REM, and confirmed it will continue to be involved — told the Herald that changing the publication dates will not make inflation “lower.” Paolicchi recalled that in May the INDEC had announced that it would postpone the publication of April’s inflation figures until after five provincial elections — a decision the government later backtracked.
“And then, they say they will publish [the REM] after the primaries,” Paolicchi said. “It’s very weird.”