The government has ticked another box in the quest to deflate the inflationary escalation. As expected, the Minister of Economy, Sergio Massa and his bishop in the Ministry of Commerce, Matías Tombolini, concluded an agreement with the main suppliers of the consumer goods industry (glass, aluminum, petrochemical, plastic and container manufacturers) for avoid increases of more than 3.9% per month through March next year.
“The purpose of this voluntary agreement is to give you predictability of the cost structure of companies participating in the Fair Pricing programme due to the fact that one of the fundamental factors in the formation of the price of a product are the costs of the so-called widespread inputs”, indicates the official press release released after the meeting held with the managers of Aluar, Dow Chemical, Alpek Polyester Argentina, Cattorini Hnos, Veralia, Rigoleau, Nueva Cristalería Rosario, IFF, Danisco and Solae, Grupo Saporiti, Transclor, Tetrapack and Cartocor.
Official sources underlined that the agreement provides for “an increase criterion” for key inputs for food, beverage, toiletry and cleaning production“under no circumstances” may they have increases “that accumulate an additional 3.9%” per month on average compared to December.
Thus was born the Massa-Tombolini duo added a new link to what they call “a price path with predictability”, in this case on the manufacturing costs of massive products. These are essential materials, “such as polyethylene, aluminum, cardboard for packaging and inputs in the food and hygiene chains”. The declared goal is to align prices so that inflation in 2023 reaches 60%. Well below the 90% floor expected by private consultants.
In return, Massa pledged to companies that agreed to “give them tools of predictability in terms of access to the single free foreign exchange market (MULC)”, i.e. release dollars from central bank reserves so they can pay for imports. It’s the same methodology that has been used to get companies to join the multiple price deals that are closing, including the mass consumer (fair prices), textiles (due to yarn prices) and combustible. Without going any further, this week would add with the footwear sector and the next, with tourism.
“It is the first time in history that untied supplies enter into this type of agreement”, celebrated Tombolini referring to the announcement made this Tuesday, that is 9 days before the November inflation data were known, which government trust below 6% in line with data from the City of Buenos Aires: last month the cost of living in the neighborhood recorded an increase of 5.8%, accumulating in the first 11 months of the year at 89.9%. Massa hopes it will reach 3% in April.
“Voluntary agreement”, “price path” and “predictability” to access dollars are part of the vocabulary of the current economic team. This Monday, precisely, those same phrases were used in the announcement of Now 10, a new program to purchase 83 mobile phone models in 10 fixed installments at an annual rate of 48%l, which is almost 15% cheaper than the traditional Ahora 12. In return, the electronics manufacturers based in Tierra del Fuego have promised to freeze prices for 90 days.
In this regard, Massa underlined that “it is very important to establish a maximum price criterion as we are doing”, he underlined. She also added that “we are moving forward with measures and programs that aim to order prices to bring predictability and relief to Argentines and recover the purchasing power of wages on the basis of voluntary agreements with various productive sectors”.
Source: Clarin
