Global Inflation Woes, From Argentina to China

As economists try to get an accurate picture of global inflation, many suspect certain governments of fudging numbers—but only one has been fingered by insiders. For more than a year, consumer and investor groups have accused Argentina's official statistics agency, INDEC, of deliberately underestimating inflation (officially 9.1 percent) by at least a factor of three, in order to prolong the illusion of rapid growth that the country enjoyed following its 2001 economic crisis. Last month INDEC employees launched an online petition, demanding that President Cristina Fernández de Kirchner stop pressuring them to produce rosy numbers. And this after she publicly denied meddling.

While Argentina is the only offender seemingly caught red-handed, the problem of bad bookkeeping goes much wider. China's numbers are notoriously unreliable, due in part to under- and overreported performance numbers that the provinces feed Beijing. In fact, Goldman Sachs recently developed a system that rates the reliability of consumer prices and other stats on a scale of one to five. Even in the United States, which prides itself on transparency, the list of goods that are factored into the official consumer price index has been edited down by successive presidential administrations since the 1970s to make the inflation rate look increasingly less scary. The upshot is that while 50 countries already face double-digit inflation, according to official estimates, the real number is probably a good deal higher.