The strong local inflation forces consumers to have a calculator at hand every day, the dizzying changes in prices make it impossible to have a clear certainty of how much money is needed to meet the multiple expenses that a family has per month. A private study focuses in particular on the evolution of the prices of the basic basket of services and March increases.
How many pesos will a typical family need? (two adults and two children) to pay for services such as electricity, water, gas, transport, private school, cell phone, fuel and prepaid cards, as well as rent and expenses. How much was needed in September 2022, since the government started limiting subsidies, and how much will be needed in March.
According to the consultancy firm Focus Market, a “typical” family starts by paying $178,928 in September 2022 and will end up paying March 2023 in the amount of $320,683this implies an increase in the 79.2% of its service basket in just one semester.
To arrive at these numbers, the consultant took the case of a typical family of 4 members (two adults and 2 school-age children) and from there warns that while in September 2022 the typical family needed 4,500 pesos to pay the bill electricity, they’ll end up paying about $7,776 after the rate adjustment is complete. “This is due to the removal of subsidies in 3 tranches of 20%, predicting that in April 2023 they will approach paying more than 70% of the full rate,” they indicate.
In the case of water (tariff segmentation which, in addition to taking income level and financial situation, from the consultant they took a criterion by geographical area which determines that in March they should have only 15% of the subsidy) this family will pass from paying $800 to $3900.
As far as gas is concerned (the state contribution is removed in three tranches according to the users: Level 1, with high incomes, an average increase of 84% was applied to all categories, so that finally in March 2023 the up 14%), assuming this family lives in a residential area, estimates suggest it will rise from $3,500 to $7,342.
“The increases in services will weigh heavily on Argentine families. Even if wages recorded in the last 2 months exceed inflation on average It will depend on the sector or area in which that person works,” says Damián Di Pace, head of Focus Market. The specialist explains that this scenario gets worse if it is a mono-tax collector.
If, moreover, the heads of these families are informal, they “will be in the worst of worlds” because they will have lost an average of 20 points from inflation on an annual basis.
Of that basket of basic expenses that a family has, one of the most important services is rent. To do this, the consultant took as a starting point a contract that started in March 2020 (which is corrected by the Lease Contract Index for 2022 and finally by the REM data). Taking all corrections, consultant Di Pace indicates that a typical household will drop from $60,000 to $114,000 by March 2023.
To this figure we must also add expense expense. The same had a year-on-year increase of 100%, those family members would go from the $12,500 payment to $20,202 in March 2023.
An expense that has also become essential is that of internet, cable and mobile telephony. Bearing in mind that the companies providing these services will be able to apply increases of 4% in January 2023, 4% in February, 3% in March and up to 3.5% in April, the pencil will have to be fine-tuned: the values they would range from approximately $3800 to $5133; cable or streaming service would increase from $3,700 to $4,998; and the phone (two cell phones per adult) would go from $3,200 to $4,903.
As for fuel, since December 2022, there has been an increase of 4% every month and up to 3.8% in March 2023. In this way, if that same family has a car, its use will decrease from paying $20,000 to $25,258.
If the use of family transport is added to these, considering the weekly Taxi service (last increase in November 2022) added to the use of Public Transport with combinations (expected increases in 4 sections starting from March 2023) and the Insurance of the Auto (it had an average increase of 50%). This family that paid $6,500 in September 2022 will pay approximately $10,140 in March 2023, as far as taxis are concerned; $2,128 to $2,979 if travel by public transit is included; and $11,300 to $17,556, related to auto insurance.
In March, like every year, the private school fee will also increase. Until December 2022 there have been increases of up to 14.5%, to this amount has been added another increase of approximately 10% in tuition and the increase in the monthly fee will be added for what, according to the consultant’s calculation, would go to pay $20,000 to $55,000 (this value includes the two minors in primary and secondary school).
“It is important to consider that there are services that have not yet risen relative to the level of accumulated inflation in recent years or have lagged behind the rates of increase determined in early 2022 when inflation was expected to be 33%, which ended up being almost 3 times higher by the end of the year. This will leave prices for services lagging behind past and future inflation Therefore, throughout 2023, further increases are expected after March 2023, which is what we estimate in this report,” says Di Pace.
In this way, this witness family that started paying $178,928 in September 2022 (the date on which the path towards normalizing the prices of public services began), and would end up paying $320,683 in March 2023, which implies an increase of 79.2% of its basket of services in a single semester.
“This basket only includes services and not food. If you add the value of a basic food basket considering moderate food inflation of 4% for the next few months, it will be $82,300 in March 2023,” the consultant points out. And they conclude: “Thus, a family will need $402,983 to cover its basket of services and food. to support the cost and standard of living. If we take into account that the living and mobile minimum wage in March 2023 will be $69,500 This household will require 5.8 living and moving minimum wages to cover the basket of services plus food“.
NS
Source: Clarin
