Since the beginning of the year, the acceleration of food prices above the general level of inflation has accelerated again the gap between the consumption possibilities of low-income sectors and those with greater purchasing power. Among other reasons, because the official program of Fair prices It is not present in smaller firms, where prices tend to rise more and where households with lower incomes tend to buy more.
These differences have been dragging on since last year but have become more pronounced for different reasons. One of them is the loss of real wages, as a result of inflationary pressure which worsens in the lower socioeconomic levels. Over the past year, the richest half of the population saw their income fall by an average of 1.6%, while the bottom 50% fell by 3.3%.
This reality that has been installed in the purchasing power of households has led to a redistribution of household expenses, especially among the population with lower incomes who allocate a greater share of their income to the purchase of food. Thus, these consumers have had to increase this expenditure and on the other hand reduce spending on household items and leisure activities, for example.
A recent report by the consultancy firm Ecolatina highlights that “the poorest deciles of society not only spend a greater percentage of their income on consumer products: according to the latest INDEC Household Expenditure Surveybottom 10% income households allocate only 15% of their spending on food and drink to the modern channel, while that percentage grows to 45% in families of the richest 10%.“, he explained.
To mention only the strongest impacts on fresh food prices, it is enough to remember beef (in February it grew by almost 26%, after eight months of relative delay) and that fruits and vegetables have become more expensive by 30% and 36% respectively, in the first two months. On the other hand, they are at the same time the groups that weigh the most in the consumption basket of low-income families. “Together, they account for 18% of the bottom income decile and 6% of the top 10%,” according to Ecolatina.
But in addition to the reduction in income and the redistribution of expenditure, the gap in purchasing power has also increased the price differences that exist between different marketing channels.
In supermarkets where the official fair price policy applies, the middle-class or high-income consumers, can pay with cards and take advantage of promotions, they have access to cheaper prices. According to the Nielsen IQ consultancy, The price difference between fair prices in supermarkets and the same products compared in neighborhood shops or supermarkets ranges from 30% to 80% depending on the product. For example, a 1.5 liter bottle of sunflower oil may cost 80% more in a self-service shop, a bottle of soda 20% more; a can of beer 77% and laundry soap between 52 and 61% more than the gondolas in a supermarket.
According to information from this consultancy, price differences are found to a greater extent in beverages (50%), cleaning products (27%), fresh, dairy and frozen food (25%) and cosmetic items and toiletries (21%).
According to data from Ecolatina, rice grew by 16.7% in supermarkets and 19.3% in traditional shops this year. This relationship was 19.3% and 26.2% for dry noodles and 14.7% versus 21.7% for fluid milk. On the other hand, the increases in the large chains, in products such as bread (20.9% in supermarkets and 14.6% in small businesses); in oil and sugar.
However, on a more general level, the largest increases in local businesses, which represent 60% of consumption, are evident in the measurements, for example, the basic basket that measures the Institute for Research on Social, Economic and Citizen Policies (ISEPCI), in 900 local businesses from 20 districts of Greater Buenos Aires, up 13.9% in February. This is the “highest monthly rise since the crisis at the beginning of the century,” explained a source.
These differences are related with consumer behavior trying to lighten his pockets. This explains why sales in big chains increased their sales volume by 7.8% in the last year (including January 2023) and that self-service shops recorded an average decline of 9.1%, according to data managed by the consultancy firm Scentia. sales channels.
“Clearly, this year the price gap started with a significant difference”, says Osvaldo del Río, director of that consulting firm. Already in 2022, “out of a comparison of 2100 products from both channels, neighborhood outlets grew, on average, 11% more than chains. This resulted in them having a price gap of 25 to 30% on average,” the analyst explained.
Source: Clarin
