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UPDATE 1-Argentina's inflation spikes ahead of legislative elections
October 12, 2017 / 8:10 PM / in 10 days

UPDATE 1-Argentina's inflation spikes ahead of legislative elections

(Adds details from report, economic and political context)

BUENOS AIRES, Oct 12 (Reuters) - Consumer prices rose 1.9 percent in Argentina in September, government statistics agency Indec said on Thursday, pushing the nine-month inflation reading to 17.6 percent, above the upper band of the central bank’s target for the year.

The central bank, which has tightened monetary policy, is aiming for inflation between 12 percent and 17 percent in 2017, while economists forecast it to be at 22 percent.

In greater Buenos Aires, used as a proxy before the national index was launched in July, prices rose 2 percent in September and 24.2 percent in the 12 months through September.

That marked the highest monthly reading for greater Buenos Aires since April.

While Argentina’s economic growth has accelerated in recent months, providing a boost for President Mauricio Macri’s market-friendly coalition ahead of legislative elections on Oct. 22, taming inflation has proven more difficult than initially hoped.

The central bank, which kept its benchmark interest rate unchanged at 26.25 percent on Tuesday, hopes to end the year with monthly inflation around 1 percent. That would put it on track to meet its 8 percent-to-12 percent target next year.

Economists, however, forecast inflation in 2018 to be 15.8 percent. In holding the line on interest rates this week, the central bank said it expected inflation to slow in October after rising in September.

The surge in consumer prices last month was driven by a 4 percent increase in seasonal goods. Core inflation increased by 1.6 percent, more in line with previous months, while regulated prices increased by 1.7 percent. (Reporting by Hernan Nessi and Luc Cohen; Editing by Diane Craft and Paul Simao)

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