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Why do measures of inflation differ?

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The 5.8% that Buenos Aires inflation showed in November was higher than the 4.9% reported by the country-level INDEC and that difference it could happen again in December if national inflation is below 5%, as Sergio Massa assured.

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However, taking a longer period, say 12 months, the interannual inflation of the INDEC in November was 92.4% and that of the Buenos Aires management was 89.9%. It can be assumed that although the INDEC inflation in December is lower than in Buenos Aires, annual inflation would be slightly above the CABA’s 93.4%.

Private consultants, for their part, have estimated a monthly inflation of 5.5% for December and an annual variation of 95.5%. in line with official measurements.

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From this it can be deduced that, although they differ in one month or another, when longer periods are considered, the measurements do not show great differences and, with more or less delay, the increases They tend to stabilize.

From month to month it is common for official inflation measurements to differ according to regions of the country and private surveys. Is that the consumer price index (CPI) takes into account the evolution of prices of a set of goods and services representative of household consumption expenditure according to the structure of each province or region, the composition enhousehold spending levels and the weight that each good and service has in the general index.

Through a national survey it was possible to know how household expenditure was formed – the composition of expenditure – and which items were most consumed – the weight that each has within the total expenditure.

For example, the variation in the prices of food products has a greater incidence in families with children and in the Northern Index of the country than in Buenos Aires, where, for example, the weight of private school is greater with children.

The surveys of the amount of prices also vary according to the structure of each agency or consultancy company, highlighting that of INDEC and the provincial directorates with respect to any private measurement.

INDEC also makes it clear “Check different areas and different shops (shops, supermarkets, hypermarkets, self-service, shopping malls, etc.), which offer the same varieties at different prices and use an average for the calculation, attributing the corresponding importance to each type of business based on sales volumes.

“When INDEC states that the increase recorded in the prices of a group of goods was by a certain percentage, it may happen that the consumer perceives that “this figure does not reflect reality”. In truth, it would be strange if it coincided with the consumption of a particular family, because it represents an average of the expenditure of families as a whole”, clarifies the statistical body. And he adds: “People look to this index for information that can help them make day-to-day decisions about their income, assets and consumption. Moreover, each sector or person perceives the price increase according to their own interests”.

INDEC concludes that “given the different interests that converge in society, the state is the only institution capable of providing an impartial indicator that can be used by the entire population. In addition, the work of preparing the index requires the use of globally accepted and approved procedures. These large-scale measurement techniques require a lot of human and economic resources, which is why only the state can assume this responsibility.”

Source: Clarin

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