Here is a shocking story; in Argentina, the head of the statistical service is accused of manipulating consumer price index data. It appears that the service over-estimated inflation data, thus creating higher returns for inflation-indexed government bonds.

BUENOS AIRES (Dow Jones)--An Argentine federal prosecutor has identified evidence of a violation of secrecy rules and a manipulation of consumer price data at the national statistics agency, INDEC. In a report on his findings released late Wednesday, Manuel Garrido, a prosecutor in charge of administrative investigations, said he detected the use of "devices" and "artificial elements" to create "false public information."

The report was delivered to another prosecutor, Carlos Stornelli, who is handling a case brought by opposition leaders against Commerce Secretary Guillermo Moreno for his involvement in the alleged distortions within INDEC's consumer price index measurement.

In its designated role in monitoring and maintaining a system of price accords aimed at containing an inflationary trend, Moreno has become a controversial figure in Argentina. Rumors of his resignation earlier this week prompted a brief rally in the country's bonds before these were proven to be untrue.

The former CPI director, Graciela Bevacqua, was insistent on CPI measurement methodology that would have resulted in a significantly higher January inflation reading than eventually released. Suspicions over the reliability of the monthly inflation reports have risen, causing sharp losses in Argentina's CPI-linked bonds.

The government has periodically turned the blame onto INDEC staff, accusing unnamed personnel of falsely inflating CPI data in a pact with holders of inflation-linked bonds.