The Argentine government lost a great deal of credibility last year when then-President Nestor Kirchner replaced a respected director of the national statistics agency, Indec, with a political appointee who turned the agency upside down and began publishing false inflation data.
Economists, talk-show hosts, newspaper columnists, opposition parties and political analysts blasted the move, saying it was not in Argentina’s long-term interest to lie publicly and repeatedly about economic data. Inflation, economists say, probably totaled 15-20% last year, but Indec indicates the figure was about half that. The situation became so absurd that Cabinet Chief Alberto Fernandez even said “there is no inflation in Argentina.” After a public outcry, Kirchner had to correct his cabinet chief, confirming that “of course there is inflation.” But the president did nothing to dispel claims that Indec continued to manipulate data.
Today the agency and its data remain controversial. Yesterday Indec said January inflation totaled 0.9%, unchanged for the third consecutive month. Economists, as well as average Argentines, have scoffed at the figure, knowing it doesn’t reflect reality. Some economists even say the real number probably was closer to 2% or higher. More conservative estimates put the figure at around 1.2%. Whatever the case, it was interesting to see how the country’s top two newspapers reported the inflation data in today’s editions.
Clarin: In January, official inflation was lower than expected: 0.9%
La Nacion: For Indec, inflation is frozen at 0.9%
Clarin: Transportation & tourism were the biggest increases
La Nacion: For the third consecutive month, the official agency released the same data for the CPI
If read carefully, both headlines seem to imply that the data released by Indec is not the only data available or the only data worth being considered. Clarin’s reference to “official” data lends implicit recognition to the idea that unmentioned “unofficial” data may also exist. Of course, this is a tacit reference to unofficial inflation estimates by private sector economists, most of whom blast Indec for being unreliable.
Meanwhile, La Nacion’s headline says that “for Indec” the inflation data was 0.9%. Here, too, is an implicit reference to outside inflation data. Though more subtle, La Nacion’s implication is that while “for Indec” inflation may be 0.9%, for others it may be different.
The first two paragraphs of Clarin’s story then gives a straightforward account of inflation that leaves out any mention that economists think the data is unbelievable. Clarin:
“Against all private forecasts and even surpassing the government’s own expectations, yesterday we learned that January’s inflation was 0.9%. The data released yesterday by Indec reveals that over the past 12 months retail prices have risen 8.2%. The increase in tourism-related services and the rise in public transportation costs (buses and subways) were the biggest increases in the categories that pushed consumer prices up.”
In contrast, La Nacion’s first two graphs were much more skeptical, giving readers clear reason to think the government’s numbers aren’t trustworthy. La Nacion:
“As if it were a broken thermometer, the official inflation data remained stuck at 0.9%. Yesterday the national statistics agency reported that the cost of living in January of 2008 rose 0.9% and, in doing so, repeated the index registered in November and December of 2007, despite the fact that Argentine consumers had to pay strong increases in transportation, tourism and some fruit prices. The official indicator was way below the estimates of private-sector economists who calculated the month’s real inflation at 2% and who tossed aside the hope that with new Economy Minister Martín Lousteau at the helm, Indec’s statistics would start to become more reliable. Moreover, Indec’s data was two-tenths lower than that from January of 2007 and, as a result, means that over the past twelve months inflation has totaled 8.2%”
The difference between the two articles becomes even more pronounced as they look at higher public transportation prices and ask why those prices didn’t have a greater influence on January’s inflation figures.
“However, private-sector analysts had estimated that the impact of the increase in bus and subway tickets would be greater. ‘What happened is that many years have gone by without any increases in those prices, so the public transportation category has been losing weight in the inflation equation, and so its impact hasn’t been very important,’ they explained in the government.”
Clarin then went on to give a little background and say that, in January, subway tickets rose 28.6% to 90 centavos while bus tickets rose 16.5% to 90 centavos. Clarin’s article continues but it does not say what the inflation data would look like if the index were updated to include a representative increase transportation prices. La Nacion’s story, in contrast, takes a more detailed look at the issue and shows readers what the inflation data would look like if the transportation price hikes had been given more weight.
“The most polemical number from the report released yesterday was the transportation index. Private-sector economists had expected an average of a 22% increase in bus, train and subway tickets beginning January 1, which alone would have led to an increase of 0.8% in the cost of living in the first month of 2008. That is, for outside analysts, inflation in January would have had a minimal floor increase of 0.8% because of the of impact of the transportation category. However, Indec’s measurement was very far from reflecting that reality. For the official agency, the increase in public transportation was only 11.1%, which translated into an increase of just 0.28% in the cost of living for the month.”
Both newspapers said the higher transportation costs were partially offset by a 5.3% decline in fuel prices, but La Nacion gave this as the only explanation for why higher transportation prices didn’t further influence Indec’s data. La Nacion then cited more economists who question the government’s data:
“‘What Indec did with the transportation data is very crude and it constitutes the epitome of statistical manipulation because it minimizes the increase that we got in buses, trains and subways,'” said Osvaldo Cado, an economist with the consultancy Prefinex.”
La Nacion then continued to highlight possible flaws in Indec’s data:
“In the case of food there also were important discrepancies between the official data and that provided by private-sector economists. For Indec, the (food) category rose an average of 0.7%, led by higher prices for fruits and vegetables like onion – which rose 15.2% – and lemons (10.9%), although these were offset by declines in tomatoes (13.8%) and plums (13.4%). For private-sector analysts, the increase in food, in contrast, was much greater and, according to the consulting firm Tomadato, which collects supermarket price data, the basic cost of a basket of food rose 1.49% in January. Indec had said the costs of a basket of food had risen 0.78%, meaning a family of two adults would need to have (a combined monthly) income totaling 445.62 pesos to not fall below the poverty level.”
La Nacion then questioned the accuracy of Indec’s tourism price data:
“Another questionable category was tourism, which for Indec rose just 5.9%. ‘The tourism indicator reflects an evolution of pries that any person who has been on vacation knows is not real,’ said economist Pablo Rojo.”
La Nacion also said “the manipulation of the statistics also appears to have reached wholesale prices.” Finally, the La Nacion discussed a recent admonition to Argentina from the International Monetary Fund, whose chief has said that Argentina needs to have “a better appraisal of what inflation really is” in the country. “Obviously, for reasons everyone knows, the official Indec index does not reflect the way it goes.”
So what’s the conclusion from all this?
Beauty, so the saying goes, lies in the eye of the beholder. For Indec, it seems, so does truth, at least when it comes to reporting inflation data. This makes it all the more important for media in Argentina to be extra careful when writing about inflation. Journalists should go about doing their job with a healthy dose of skepticism. Indeed, they have to. If not, they would risk becoming no more than a tool, a mouthpiece for disparate interests in society.
“The purpose of journalism,” wrote Bill Kovach and Tom Rosenstiel in The Elements of Journalism, “is to provide people with the information they need to be free and self-governing.”
To fulfill this task, the authors note:
- Journalism’s first obligation is to the truth
- Its first loyalty is to citizens.
- Its essence is a discipline of verification.
- Its practitioners must maintain an independence from those they cover.
- It must serve as an independent monitor of power.
- It must provide a forum for public criticism and compromise.
- It must strive to make the significant interesting and relevant.
- It must keep the news comprehensive and proportional.
- Its practitioners must be allowed to exercise their personal conscience.
If journalists are to provide citizens with “the information they need to be free and self-governing,” reporters must give consumers the context and commentary necessary to interpret that information accurately. Given there is reason to believe Indec’s data are inaccurate, newspapers have a duty to remind citizens of this. Over a year has passed since Kirchner began tinkering with Indec, but this does not diminish the need to remind readers about the agency’s questionable practices.
Probably there is nothing more the government would like than for newspapers simply to report the data without commentary or analysis. But to do so would be an abdication of responsibility. Both papers have a duty to report the data and (if possible) whatever commentary the government offers about it. But they also have an obligation to put that data into context and let readers know if there is any reason to question it. In this case, Clarin failed to do this to the best of its ability.