(Adds details from report, background on price hikes, salary
BUENOS AIRES Feb 9 Consumer prices in greater
Buenos Aires rose 1.3 percent in January over the previous
month, Argentina's official Indec statistics agency said on
Thursday, far below market expectations and in line with the
central bank's annual target.
January's reading was slightly above 1.2 percent inflation
in December, but below a median expectation for a 1.7 percent
rise in consumer prices in a Reuters poll.
The central bank is targeting inflation between 12 percent
and 17 percent for 2017. It has kept interest rates steady for
the past 10 weeks, noting that consumer prices had shown "mixed
signals" in January.
Private economists see 2017 inflation somewhat higher, at
above 20 percent, and say 2016 inflation totaled around 40
Argentina does not publish countrywide inflation data, but
consumer prices for the greater Buenos Aires area are used as a
proxy. President Mauricio Macri revamped Indec after taking
office in late 2016 due to widespread allegations of data
manipulation by the previous administration. Indec resumed
publishing inflation data in June.
January inflation was driven by an increase in
transportation costs, after the government increased regulated
gasoline prices early in the month, as well as an increase in
recreation prices in the peak summer tourist season. Food and
drink prices also rose 1.6 percent.
That was outweighed by a 2.2 percent drop in clothing prices
and modest increases in other categories.
The central bank has noted that regulated prices, such as
gasoline and electricity, are likely to increase by more than
the core basket. Core inflation was also 1.3 percent in January,
the lowest level since Indec resumed publishing inflation data.
Last week, the government announced a reduction in domestic
electricity subsidies as part of its efforts to trim the fiscal
deficit. The resulting price hikes of between 60 percent and 90
percent for most Buenos Aires-area consumers are expected to
contribute to inflation in February and March.
The reading comes ahead of key annual salary negotiations
between unions and employers, in which inflation expectations
are a crucial factor in determining the level of pay raises.
(Reporting by Luc Cohen; Editing by Lisa Shumaker and Jonathan