Recently, a viewer contacted us with a question about Niall Ferguson’s math in regards to inflation rates in Argentina during its 1989 economic collapse. In episode 4 of the series, Niall states that the country was experiencing 100 percent inflation per month for an annual rate of 12,000 percent. He then goes on to give the example of a dinner that cost 10,000 Australes in May, would cost 20,000 Australes in June and by July, would cost 60,000 Australes.
The viewer questioned both how Niall had calculated the annual rate of inflation to be 12,000 percent and how, if the monthly inflation rate was 100 percent, the dinner would cost 60,000 Australes in July.
We contacted Niall to find out how he arrived at those numbers. He clarified the calculation for us, acknowledging that although he discusses the annual inflation rate, he in fact uses the monthly consumer price index rather than the annual inflation rate to calculate the price of the dinner.
The consumer price index in Argentina in June 1989 was 2.14 and in July, it was 6.36. Multiplying 10,000 Australes (the cost of the meal in May) by 2.14, the cost of the meal in June would be 21,400 Australes. Niall estimated 20,000 Australes.
For July, 10,000 Australes would be multiplied by 6.36, bringing the cost of the meal up to 63,600 Australes, or approximately 60,000 Australes, as he states in the film.
Here is precisely what he had to say:
…I got it wrong — well, half-wrong.
The exact figures for June 1989 were in fact a monthly rate of 114% and an
annual rate of 1,472%, so the viewer is right on point one. I should have
“By June 1989 inflation in Argentina had reached a monthly rate of OVER one
hundred percent. An annual rate of roughly ONE THOUSAND FIVE HUNDRED
However, the index numbers for May, June and July are 1, 2.14 and 6.36, so
the figures for the price of dinner are correct.
I well remember having to get those figures on location via a BlackBerry
because we decided on the spur of the moment to make the point about
inflation more concrete. But we should have spotted the error and corrected
…”To err is human, to forgive divine.”
We appreciate the viewer’s feedback and attention to detail.