Slowing inflation will provide a significant boost to Argentine President Nestor Kirchner's ambition to win a second term in next year's presidential elections, said political analyst and pollster Sergio Berensztein in Buenos Aires. Berensztein said Kirchner's popularity depends largely on the country's economic expansion. 

``Without price controls, inflation would accelerate to 16 percent in the year and while prices in the index are controlled, the others jumped,'' said Berensztein in a news meeting with reporters today. ``Inflation has a very strong impact in salaries, so it's important for the government to keep it under control before the elections.''

Kirchner, 56, has sought to stem inflation in the fourth year of economic growth by signing accords with companies to freeze prices for about a year. The annual inflation rate more than doubled in 2005 to 12.3 percent from 6.1 percent a year earlier as consumption soared and companies worked at almost full capacity. Economists including Bertrand Delgado at IdeaGlobal Inc. in New York said the price controls are limiting the increase in the index. 

Kirchner's three years of fiscal surpluses led him to increase spending 27 percent in June from a year earlier, mainly for public works and higher pensions and salaries.

Clothing prices fell 2.8 percent in the month while the cost of food and beverages remained unchanged. Tourism related services rose 7.6 percent and housing services, including rents and maintenance fees, rose 2.5 percent because of a wage increase for superintendents. 

The country's consumer price index also rose last month because of rising rents and an increase in condominium maintenance fees, the institute said.

Argentina's peso has weakened 1.5 percent this year to 3.071 per dollar, increasing prices of dollar-related goods.