There is no inflation in Fairyland

"There is no inflation in Argentina." Alberto Fernández dixit. As the uproar began, the Chief of Cabinet pointed out, in the measured, academic tone we've grown accustomed to, that inflation is "a generalized increase of prices", and that's not what's happening in Argentina. Only potato is a bit more expensive these days; and if you buy from the grocery store where INDEK's officials, gun pointing to the grocer's head, measure the sample prices, then not even potato. Just a couple of cents, at most, because of the frost.

One has to wonder if Fernández is pathologically loud-mouthed or merely delusional. I can't believe he's just lying upfront. I mean, politicians lie, but after a while they learn that they can't lie all the time, that they need to learn how to make up excuses, and that sometimes you just have to accept reality and your best bet is trying to look puzzled and frustrated. Back when there were no price controls, the government resorted to being publicly angry. Anger is not as dignified as simple frustration, but it worked for a while. Then the government decided it was better to deny reality and be done with it. Recently, when Martín Redrado, the president of the Central Bank, said in a meeting that he was worried about the creeping inflation, Fernández lashed out at him like he'd insulted his mother or something.

President Kirchner apparently doesn't know that it's not a good idea to surround yourself with people who always tell you you're right. One of these days I'll try to explain what his style is, but right now he's behaving like a cross of spoiled child with the infamous patrón de estancia — a rich countryside landlord accustomed to treat everybody as stupid obedient workers, a caudillo. That worked when he had to rule a province with 200,000 residents scattered in the desolate Patagonian plain, but you can't boss around a country of 40 million.

For those not living in Argentina: we do have inflation. We don't have lots of it, but it's noticeable, and it's worse on the basic items. Prices go up unreasonably and then tend to come down, but they do so slowly and they don't return to the previous levels. Months ago, bell peppers were 4 or 5 pesos per kilo. During the winter they reached 15 or 20 pesos per kilo — more expensive than prime-quality beef. Now they're 7 or 8 pesos per kilo. Tomato, as per my latest visit to the supermarket, is about AR$9/kg. With nice beef going at AR$14, throwing an asado party and filling up your guests with a tomato salad is no longer an option. And the dreaded potato — around AR$5, three times the price recorded in Fairyland Market.

Rents and real estate are also terribly expensive. Travelling, eating out, coffee in cafés, clothing and footwear are climbing. You could buy nice shoes for 100 pesos last year that you won't find at less than 125 now. You could have a beer and a cup of peanuts in a bar for 6 pesos last year; now they'll charge you 9 (and you'll have to ask for the peanuts). In January 2006 I paid 100 pesos for a round trip to Mendoza; in January this year I paid 160.

INDEK says there was 0.8% inflation in August. In Buenos Aires and the Metropolitan Area, only 0.6%. This is no wonder, since price controls are only enforced there, and the government only cares about Buenos Aires — that's where most voters are. In the provinces, recorded inflation was invariably higher, because independent provincial state organizations do the stats — 1.5% in Mendoza, 3.3% in San Luis. And Mendoza's figures were retouched, they say, because they had come in at over 3%.

Private measurements give an inflation rate of about 15% for the last 12 months, where INDEK gives 8.7%. And that rate includes items with regulated prizes, and items that have no relevance at all for many middle-class and most lower-middle-class and lower-class homes, such as dog grooming.

Update: Mendoza's Minister of Economy and the head of its Statistics Bureau have jointly announced that they reported an inflation rate of 3.1% directly to INDEC, and that that number was deliberately modified. Mendoza's weight in the national inflation rate is only about 4%, so the overall difference would've been minor, but the thing is that Mendoza and San Luis, which are neighbouring provinces of the Cuyo region, have been consistently (and logically) reporting similar rates that are significantly higher than INDEC's national figures and closer to public perception, so they were taken as an indication of the real inflation. INDEC released their monthly inflation report at 11 PM, seven hours past the usual time, and it seems likely that the tampering was ordered at the last moment.