The Unidad Indexada is a unit of account created by norm, with an initial value fixed in pesos and a daily variation that replicates the price index of a month earlier than the current one. It is neither a currency nor a price index: it is a multiplier whose value the Instituto Nacional de Estadística publishes every day. Rent agreed in UI is converted into pesos with that multiplier on the day of payment, and that is the whole mechanism.
Who created it and who calculates it
Decreto N° 210/002, enacted on 12/06/2002 and published on 17/06/2002, created the Unidad Indexada with a value of $ 1,00 on 1 June 2002. The same decree placed with the Instituto Nacional de Estadística everything relating to the administration of the unit and the publication of its daily value, and left the calculation procedure in an annex forming part of the norm.
Two years later, Ley N° 17.761, enacted on 12/05/2004 and published on 19/05/2004, fixed the unit again: a value of $ 1,2841 on 1 August 2003, with the daily variation formula in its own article 2. Its article 3 declares that obligations contracted with Unidades Indexadas as a unit of account are governed by that law, which includes a lease agreed in UI.
The formula of the Unidad Indexada, in words
The principle is in both norms: the UI varies daily until it accumulates the same variation the consumer price index accumulated during an earlier month. The law specifies the start: between 1 and 5 September 2003 the unit was adjusted with the same daily coefficient applied during August 2003, and from 6 September 2003 the formula of article 2 governs.
That formula takes as its base the value of the UI on the fifth day of the previous month and as its input the price index of two months before the current one, spreading the variation across the days running from the sixth of one month to the fifth of the next. Three practical consequences follow: the adjustment period does not coincide with the calendar month, the value changes every day rather than once a month, and the index moving it is not that of the month being lived through.
Numerator, denominator and lag
The numerator is the variation of the consumer price index of a month already closed and published. The denominator is the number of days of the adjustment period, which runs from the sixth of one month to the fifth of the next. The result is a daily coefficient applied cumulatively to the value of the UI in force at the start of that period.
The lag is two months between the month the index measures and the month in which the UI reflects it. For rent in UI this means that an acceleration of prices reaches the invoice with that delay and not before, and that a deceleration takes just as long to arrive. The unit anticipates nothing: by construction it runs behind the data, and the exact size of that distance is fixed in the norm, not in the market.
Which questions it answers and which it does not
The UI serves to express a long-term obligation in terms that move with the country’s internal prices, without resorting to a foreign currency. It therefore serves to compare two contracts with one another when both are in UI, and to separate in a rent the part that is price adjustment from the part that is renegotiation.
It does not serve to measure inflation — the index feeding it does that — nor to compare a contract in UI directly with one in dollars, because the second comparison also depends on the exchange rate and on its own moment of measurement. Nor does it say anything about the level of the rent: a low rent in UI and a high one adjust with the same coefficient.
Where to obtain the data
The daily value of the Unidad Indexada is published by the Instituto Nacional de Estadística, under article 3 of the decree and article 4 of the law. In this review the Institute’s site did not respond from the environment used, so no current value of the UI and no series is quoted: the two figures appearing in this material are the bases fixed by norm, $ 1,00 on 1 June 2002 and $ 1,2841 on 1 August 2003. The text of the decree’s annex could not be opened either, which is why the procedure is described from article 2 of the law.
Conclusions
The Unidad Indexada has two normative starting points: Decreto N° 210/002, published on 17/06/2002, which created it at $ 1,00 on 1 June 2002, and Ley N° 17.761, published on 19/05/2004, which fixed it at $ 1,2841 on 1 August 2003 and wrote the formula into its article 2. Between those two bases there are 14 months and a difference of 28,41 % between the reference values, which is a distance between normative anchors and not a measure of inflation over the period. The mechanism is daily, the adjustment period runs from the sixth of one month to the fifth of the next, and the input is the price index of two months earlier, which fixes a lag of two months between the data and the invoice. For a commercial lease that orders three questions: in which unit the rent is agreed, where in the adjustment period the payment date falls, and what part of the annual variation of the invoice corresponds to the unit and what part to whatever the parties agreed apart from it.
Este material tiene carácter informativo y no constituye asesoramiento legal, fiscal ni financiero. Las únicas cifras citadas son las bases fijadas por el Decreto N° 210/002 y por la Ley N° 17.761; no se verificó ningún valor vigente de la Unidad Indexada ni serie del índice de precios, y la fórmula del artículo 2 se describe en palabras porque su reproducción gráfica no fue posible desde la fuente consultada.
