(Bloomberg) -- Latin America is poised to face months of heightened inflation uncertainty as the coronavirus pandemic forces governments to overhaul data gathering methods.
Statistics agencies across the region are grappling with the challenge of collecting prices as many brick-and-mortar establishments shut their doors and researchers can’t go into the field due to restrictions on the movement of people. The obvious alternative -- seeking prices online -- comes with a number of drawbacks including low penetration of e-commerce in developing countries, which may cause inflation data distortions.
“That may lead to false readings of unchanged prices when, in fact, they really did rise,” Jorge Selaive, chief economist at Scotiabank Chile, said in a radio interview with Pauta Bloomberg.
While the problem isn’t exclusive to Latin America, the changes come at the most inopportune time, just as central banks need all the information they can get to calibrate monetary policy and private-sector institutions revise economic forecasts to account for the pandemic’s impact. They also coincide with a region-wide easing wave that’s brought borrowing costs to multi-year or record lows.
“Unless there’s a period of time when online data gathering runs alongside the in-person collection, it will be difficult to guarantee the prices will be comparable,” said Adriana Dupita, Latin America economist at Bloomberg Economics. “It will make monetary policy more theoretical and intuitive.”
Brazil, Mexico and Chile are among countries that will now gather much of their price data online, according to statements published by their statistics bureaus. Argentina is considering alternatives to on-site collection, while Peru said it won’t track prices from stores that have been temporarily shut.
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Governments are rapidly tightening social restrictions in efforts to halt the spread of the virus. Argentina has imposed a strict stay-at-home policy, Peru recently extended containment measures and seven districts of Chile’s capital, Santiago, have been put on lockdown. While Brazil President Jair Bolsonaro has opposed social distancing, state governors have enacted limitations on commerce and movement.
Obtaining fresh data for the costs of services will be particularly challenging. And then, there’s the hurdle of making sure the data that is collected gets processed on time while employees work remotely.
“Changes in the way data is collected can generate more uncertainty in the short term,” Brazil central bank Economic Policy Director Fabio Kanczuk told reporters last week, adding that he expects some variance in inflation data.
Mexico’s statistics agency INEGI said a shift toward data collection via phone calls and the internet may lead to information gaps and lack of precision. In a statement released on Tuesday, it called on both citizens and companies to continue providing information that allows officials to compile trustworthy statistics.
Peru’s statistics agency INEI won’t attempt to track prices from non-essential establishments including clothing stores and travel agencies that are closed amid the stay-at-home measures, according to a spokesperson. It still expects to publish its monthly report as scheduled April 1.
Paraguay’s central bank is using phone calls to complete the information gathered in-person prior to a lockdown, the bank’s chief economist, Miguel Angel Mora, said via text message. He added that any extension of those restrictions could hamper data collection going forward.
To be sure, statistics agencies are aware of the challenges and are working to ensure data continuity. Officials in Brazil, Chile and Uruguay said their price surveys already included data gathered via the internet even before the coronavirus outbreak.
Brazil’s IBGE said information for the same products, brands and models will be sought going forward. “Any and all options regarding alternative price collection methods will be previously tested and validated by the IBGE’s qualified technical staff.”
Chile’s INE said virtual price collection, coupled with phone surveys and the development of new tools “will allow work to continue even amid restrictions in store working hours.” For Colombia, it will be business as usual, as current government measures allow most stores selling consumer basket products to remain open.
(Updates with information on Mexico in 6th, 10th paragraphs)
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