Companies in the mass-consumption sector are analyzing the extension of the Fair Prices program with concern. And they do the math. Not only for the basket of almost 2,000 products that will be frozen until the end of June (therefore for 5 months), but from the ceiling of 3.2% monthly upwards for everything else with inflation projected well above. “Even if the model is not linear, the proposal seems completely unworkable“an industry source reasoned loudly.
Food companies, beverage manufacturers and suppliers say rising costs complicate the profitability of many products if overhead prices stay above 5% a month. “It is very difficult to work without profit or at a loss. In this context, the only thing that can be done is to sell as little as possible. Yet, for now there is no shortage and companies have adapted”, say Dire.
Fair prices” is the mechanism chosen by the Government to anchor expectations, which depend on macro and micro factors. Now, inflation is not a purely technical resource that can be solved by trampling on prices, but operating on public spending and generating real dollars. All this is on the agenda and we are working to gradually achieve stability goals, which do not exist today”. clarion Daniel Funes de Rioja, head of the UIA and Copal, which represents food producers.
The economic team led by Sergio Massa aspires to contain inflation with the expanded version of Fair Prices. The programme, led by the Secretary of Commerce, Matías Tombolini, seeks to establish a “price trail” for 49,832 items of more than 15 items (mass consumer, textiles, footwear, mobile phones, electronics, laboratories and even private schools, among others) in agreement with 532 companies. All in exchange for the delivery of “cheap” dollars to import.
A list of 1,974 basic items (food, drink, toiletries, and cleaning) was finally released this Wednesday, which will have fixed prices until mid-year. 65% of that total had already been frozen since November. For this reason and for those cases, Tombolini has authorized “exceptional” increases of between 4 and 9% to compensate for the price delay. This is the commitment signed with 108 producers and suppliers. At that core, today, you have larger concerns and fears.
“The basket is a smaller volume, because each company contributes a small amount of products. The problem is the 3.2% ceiling for everything else“an industry source said and explained that it’s not just because of the inflationary rebound in recent weeks.”There are also concerns about interest rates, the devaluation of the official dollar and parity. Not to mention the increase in some inputs and raw materials,” they complain.
The complaints pile up some companies have brought to Tombolini some alternative proposals to improve the situation. One of these is to untie the prices (outside the 3.2% guideline) of non-essential products and premium brands to compensate for the loss of margins in the rest of the catalogue. They say the Secretary of Commerce has rejected it, but “not emphatically.” Some are excited about the possibility of picking it up “in the future”.
Companies agree that the scenario is complex, but limited for now. It happens that Fair Prices and controls are concentrated exclusively in the large supermarket chains, which represent 31% of sales of basic necessities. “It depends on each company, but you can work with negative or low profitability in some products, but feel the inflation in the Chinese or in the shopss,” he said. He then alluded to the price gap that exists in supermarkets and local businesses, a universe where checks do not arrive.
Source: Clarin
