Concern for food prices was at the center of a debate within the government itself, when, after the onset of poverty and destitution rates, the Vice President questioned the profit margins of large manufacturing companies. In this sense, according to the price surveys followed by private consultants, the food had another strong upward momentum towards the last week of September. For Eco Go, for example, the increase in food consumed at home would have risen to 7.3% per month. That is, above the general inflation forecast, estimated at 6.7%.
When considering the evolution of prices since December 2019, general inflation in the GBA has increased by 217%, while different Basic foods such as oil, milk and sugar increased between 200 and 360%, according to official data. The price of bread, on the other hand, followed the same inflationary pace and flour rose by less than 50%.
In the last week, the data released by INDEC on the levels of poverty and destitution have revealed the erosive impact that inflation is having on the purchasing power of the population. However, that the loss of purchasing power has doubled when measured against the acceleration in food prices.
Between December 2019 and July 2022, while headline inflation (CPI) increased by 211.8% and wages increased by 196.7% (in their broad index), the deterioration in income was on average 4.8% with respect to general inflation (CPI) and al 9.1% if it is contrary to the increase they have had the food.
The calculation is made on the basis of official data which, by the way, showed a further worsening of the remuneration of unregistered private jobs since these have had a fall of the 17% of the purchasing power of food, in the last two and a half years.
Clearly, the segment most affected by the rise in food prices is those who depend on a fixed salary and the informal workers who are, who spend most of their income on foodsays Juan Pablo Ronderos, economist at MAP Economic and Business Advisors.
The problem of falling wages, the analyst recalls, comes from 2018, when inflation began to beat wages. “Today, the decline in income is on average 23% compared to 2017,” he says. “What happened to this government has failed to reverse that trend which, on the other hand, has also deepened – in a pandemic – among informal employees who lived on jobs that they could not carry out during the quarantine.
According to economist Soledad Perez Duhalde, of the consultancy Abeceb, the impact on food is increasing It will have a greater impact in the second half of the year, impacting on poverty levels.. It refers to the fact that, in the latest INDEC statistics, poverty was not as affected (it fell 4.1% year-on-year and stood at 36.5%). Meanwhile, the indigence index stood at 8.8% of people, 0.6 points higher than the rate recorded in the second half of 2021.
An exercise carried out by this consultant also showed the impact of the increase in products in the food basket according to the different social levels. If we compare the first quarter of this year with the same period of the previous year, the loss of purchasing power has worsened Income of class D2 (low minimum) 11.5% and 14.6% at the marginal level, while there was a drop of 5.8% in the C1 segment (medium-high). In the middle class (C3 and C2), on the other hand, the impacts were respectively 11% and 1.3% in that period.
Price erosion in pockets causes consumers to visit more outlets in this context due to large price gap exists for the same product, according to the marketing channels. A recent survey by the Chamber of the Oil Industry (CIARA) showed “gaps” in the prices of bottles of edible oil in supermarket chains and self-service shops that exceed 60%.
Incidentally, food inflation accelerated across the region following the outbreak of war between Russia and Ukraine. But in Argentina it is clearly much higher than in other countries: local inflation in this item is five times higher than in the region (median value); and this gap becomes even greater than in some countries: 9.8 times the inflation of Bolivia, 6.7 times that of Ecuador, 6.2 times that of Paraguay, according to a recent IERAL report.