While food prices are trending downwards in the region, they are experiencing the opposite effect in Argentina. Over the past year they accumulate an increase of 106.3%above the general level of inflation which reached 104.3% in March, according to INDEC.
WhatWhy are the prices of these goods going up?supposedly produced in the country in sufficient quantity to feed about 400 million people?
Beyond the punctual impact that may exist on some products due to a seasonal problem or a climatic effect such as drought, the local market is affected different components which end up increasing the values of the basket and deteriorating the purchasing power of consumers, according to economists.
THE list of reasons goes from cost increase of production, the increase of dollar and the high taxes which tax products up to the same inflationary “inertia”.
For Nadin Argañaraz, an economist at the Argentine Institute of Fiscal Analysis (IARAF), “the higher the inflation rate, the higher the relative price variability of the economy”.
“This occurs both among the 12 components of the consumer basket and within each of the components” and warns that “moreover there are many distortions between the same product in different places of sale. In other words, price signals are distorted. In this context the clothing and food products and soft drinks are the goods that lead to the increase in relative prices, when you take a period of five years“, points out.
However, it is enough to take the evolution of the prices of the basket over the last year to verify that the increases in the gondolas largely explain the increase in the price index (CPI) and They absorb an ever-increasing share of household income. In Greater Buenos Aires, this expenditure implies 23.4% but reaches 35.3% in the Northeast region, according to official data.
“In terms of food price, the Argentina goes back in the world. While food prices are slowing down and even falling in other countries, in our country they increase at a rate of 9% per month“, says Eugenio Marí, chief economist of the Freedom and Progress Foundation.
According to the analyst, “the fact that food has risen above the general CPI is explained by due to short term policies that hit the supply in the local market. On the one hand, imports are blocked and more expensive, reducing competition. On the other hand, local production is punished with taxes, controls and regulations. And, moreover, the agricultural dollar encourages the desire to place production on international markets. All in the midst of the worst drought in 20 years. On rain, wet,” she commented.
Rising costs and speculation
Hernan Lechter, CEPA, awards increases, “On the one hand, al evolution of production costs which have imported components and go up the exchange rate“.
At this stage, tariffs with some increases or fuels have an impact, “but all those components that may be overhead costs move under inflation,” he says.
“There is an add-on, outside of cost, that is included as an ‘expectation’. But it actually plays a big part a significant speculative component”Add.
“In the market structure of our country with large oligopolies, It is not the distributors or shopkeepers who shape the prices, but about 25 large companies that own 75% of the supermarket gondolas who have a lot of firepower to drive prices and score a little more on costs,” he explains.
According to David Miazzo, “it may be true that the egg supply has been reduced because laying hens have laid fewer eggs due to the heat or that there has been a lower supply of onions due to climate change and due matter more. But these situations are not common in all foods. The price increase is more related to weight loss“, he thinks.
Moreover, food and drink is one of the CPI items that shows real inflation. On the other hand, others, such as education, transportation, etc. they are regulated, have frozen tariffs or subsidies. That’s why they were below general inflation in the last 12 months and food was above it.”
In his view, the general average of inflation “is a bit of a lie because there is inflation contained in the regulated“, he indicated.
Asked if the effect of the Russo-Ukrainian war has stopped impacting food prices, as it did last year. Miazzo says so this effect “has already vanished in the second half of 2022And he clarifies that “it has only affected cereals, first wheat and then sunflower, and also the impact of these on food prices, in general, is very low”, he said.
As for what is happening with food prices in other countries, one indicator is the measurement by the Food and Agriculture Organization of the United Nations (FAO). In March, this index stood at an average of 126.9 points, ie 2.8 points (2.1%) less than in February, thus falling for the 12th consecutive month after hitting the maximum a year ago.
This decline is due to a decline in price indices by cereals, vegetable oils and dairy productsWhile those of sugar and meat increased. Thus, in the last 12 months, since March 2022, this index has dropped to 32.8 points (20.5%).
Source: Clarin
