Two postcards of the week illustrate the new era that has just begun. surprisingly, The price of meat has fallen between 20 and 25% in recent days after sharp increases recorded in November (11%) and in the first half of December (51%). In the sector they have interpreted that this collapse in values occurred because The public did not validate the increases.
The second image is a sign above the empty space of a gondola where a major chain warns its customers “the offer is affected by excessive increases by suppliers”. The shortages are nothing new, but this time they are due to the strong readjustments following the first measures of Javier Milei’s libertarian government.
Behind them, suppliers and traders from different sectors adapt their strategies to what some call the return of the supply and demand market. That is, without the chronic distortions of regulated prices, discretionary subsidies and artificially low rate installment plans. “In this context, the “challenge for companies is to set prices”. The end of fair prices, the devaluation of the official dollar (from 367 to 800 dollars) and the increase in fuel, among other things, triggered a wave of comments.
To such an extent that many consultancy firms predict that inflation in December will be around 30%. In the market it is believed that the inflationary flare-up and the end of the restrictions will have two effects: on the one hand, a relative normalization of stocks and a greater assortment on the shelvesbut on the other – and due to the loss of purchasing power of income -, lCompanies expect a sharp contraction in demandup to 50% in some items.
An executive from an electronics chain pointed out that they received the new price lists in recent days increases between 100 and 120% (mobile phones)and up to 70% in the case of televisions. “Sales are down a lot because people don’t validate them,” she said. The same source noted that despite the difficulties, 2023 was a good year in terms of volumes and margins. “But what comes next will be very difficult.”anticipates.
“We need to analyze case by case and sector by sector. The reality is that products had different values for different types of dollars. In this context, there is a recalibration of prices in the face of a market that is necessarily going into recession“, they complain at a motorcycle assembly plant. Hence the assumption that “maybe now the micro market will be hotter in terms of prices, but they are likely to give way due to falling demand,” he explained.
Market sources admit that in durable and semi-durable goods (cars, motorcycles, household appliances, clothing and footwear, among others), there are strong reorganizations of values. This is due to rising costs (dollar, wages, supplies, tariffs and fuel, for example) and also to “catch up” with the previous government’s “price agreements”.
This new phase, in theory, puts an end to many the distortions accumulated in recent years, especially after the implementation of Care Prices, the program created in 2014 by Kirchnerism to combat inflation. With different names and changes, the program was also in force during the Macri government, and with Sergio Massa It covered more than 50,000 products of all types and sizes..
But habits are not easy to change. Shortly after he took office, Milei’s appointed Commerce Secretary, Pablo Lavigne, suggested it to supermarkets propose a basket of products “at affordable prices”, on a voluntary basis. He promised he won’t be there no inspection or fine, but was politely turned away anyway.
Regarding the proposal, the chains shrug and joke about the “curse of the dropped baskets on Diagonal 651,” where the Secretary of Commerce is located.
Anyway, end of checks a struggle unexpectedly opened between traders and producers of mass consumption. Supermarkets are protesting because their suppliers “prices are flying wildly” and they assure it today “We set the limits because people don’t validate the increases”.
For their part, the large producers of basic items admit that some products have increased between 80 and 100%, and that this is because They try to reduce the price gap which exists between the chains (where Precios Justos operated) and the warehouses and supermarkets, which have an average of 45% with peaks of up to 90%, and above.
“The idea is that the difference is between 5 and 10%” and they assure that some chains accept, others do it little by little and others negotiate. “Faced with a scenario of expected decline in volumes, we aim to increase our reach, both with physical stores and with the expansion of the eCommerce network, to compensate,” he explained Clarion Juan Pablo Quiroga, Communications Director of Changomás, Francisco de Narváez’s chain.
Inflationary spiral
The wave of comments following the devaluation of the official dollar has changed all forecasts. Most consultancies expect inflation to be close to 30% in December., the highest monthly figure in recent years. The annual rate this year, therefore, will be around 200%. And the cost of living is not expected to slow down, at least until the second half of next year.
Since 1943 (when official measurements began), inflation has evolved as follows. Marina Dal Poggetto, director of the Eco Go consultancy company, says that “between 1945 and 1975, the average annual rate was in double digitswith a triple-digit jump in 1959 (129.5%), and peaks above 30% in 1948 (31%), 1951 (36.7%), 1952 (38.8%), 1966 (31.9%) ), 1971 (34.7%), 1972 (58.5%) and 1973 (60.3%),” he recalls.
Then, “in the period 1975-1988 a cycle of high triple-digit annual inflation rates was triggered with peaks in 1976 (444%), 1984 (626.7%) and 1985 (672.2%). And between 1989 and 1990 there was a peak of hyperinflation of 3,079% and 2,314% respectively,” he added.
“In the 90s – continues the expert – hand in hand with the law of convertibility of the peso with the dollar, Inflation has fallen to near zero levels. With the outbreak of convertibility, in December 2001, inflation returned, with rates around 20-25% for the period 2002-2017, albeit with two peaks of 47.6% and 53.8%. But, between 2018 and 2019, this led to the Argentine economy being classified as a hyperinflationary economy.”
One year later, in 2020, inflation was at 36.1%, in 2021 it reached 50.9% and in 2022 it closed at 94.8%, the highest figure since 1991″, concluded the economist .
Argentina measures inflation through the consumer price index (CPI) calculated by Indec, led today by Marcos Lavagna.
Source: Clarin
