Due to the rise of the dollar and the “liberation” of prices, There was a sharp decline in sales across the board., say producers and entrepreneurs from different sectors consulted by this newspaper. In some cases, the decline in December, which marks the start of Javier Milei’s government, was a little more limited due to the collection of the bonus (mass consumption), or represents a strong slowdown compared to previous months, such as in the case of motorcycles. In the post-devaluation and end of “depressed” prices scenario, companies expect a “very tough” first half of the year and a rebound for the second part of the year, which would not compensate for the initial contraction.
An industry tour lets you see the impact of the new measures adopted by the Government with the aim of correcting the relative prices of the economy, including the official dollar. A correction that implies increases in regulated services, such as prepaid cards, petrol and transport; and also the end of the Fair Prices program, the anti-inflationary program which in the last phase covered more than 50,000 products in sectors as diverse as mass consumption, electronics, furniture, bicycles, motorcycles and travel.
A more precise analysis allows us to observe disparate results. This is the case of mass consumption, a category that includes basic necessities such as food, drinks, personal hygiene and cleaning. In the large supermarket chains they assure that demand in the first three weeks of December did not drop too much due to the collection of bonuses and holidays. “In the last week, sales have dropped dramaticallyas expected,” he said Clarion a supermarket source.
In the so-called “modern channel” They expect a contraction for the rest of the year, which they intend to counter with new openings (to acquire customers) and with the strengthening of online sales. The end of fair pricing, they complain, represents a loss of competitiveness (having the cheapest products on the market), compared to self-service shops, warehouses, trade fairs and independent local shops.
Grocers, however, They assure that demand fell by 50% in December and predict a similar index for January and February. “One day after the ballot we received lists with increases between 25 and 30% and from there the tap was opened. After the elections we had increases of up to 100% and that is why it is logical that sales decrease because people don’t have enough money“, complains Fernando Savore, from the grocery store.
This is the direct consequence of the loss of purchasing power of income. Private consultancy firms estimate that inflation in December will fluctuate between 25 and 30% – the official data will be known next week – and that average income could drop by 8% in just one month. The lower purchasing power should be taken into account with “advance” purchases as a hedge for a possible devaluation, which eventually arrived.
Before every election, it was common to see long lines of cars to refuel, forcing many gas stations to close. Last week, oil companies increased the price of gasoline by between 26 and 27 percent which reduced demand by percentages that varied between 10 and 20% depending on the location.
“It was known that the direct consequence of the significant price adjustment would be this contraction in consumptionbut putting it back into balance is a situation that the sector is willing to endure rather than continue in a crisis of profitability, which was already hitting rock bottom due to the government’s interventionist pricing policy which caused an unprecedented relative distortion”, underlines Carlos Gold, director of CECHA (the parking chamber).
In the durable goods market, the blow was much worse. Appliance chains say that in December, after updating prices (they received increases between 70 and 120%, in some cases) they sold between 40 and 60% lessdue to higher costs and also due to the revocation of subsidized loans, such as Now 12.
“After the December devaluation, sales are down close to 40%, in some categories a little deeperand the projection for the first quarter is that this trend will continue. “It will depend a lot on what happens with the pricing regime,” says the owner of one of the leading chains, but adds that, in his opinion, there have been some comments over costs (overcoming) “after devaluation and then they are reordered.”
In the sector they design “a very difficult year”, although some hoped that “the fall would not be so sudden.” From another chain a division is drawn for December. “Before, sales were good, but after the devaluation they dropped by 60% in units,” he says and adds that “prices today are high in dollar termswith an added danger: if the values were maintained, this would encourage smuggling”, he risks.
Despite import restrictions and a lack of dollars, Motorcycle sales increased 14.5% in 2023. And in December 32,902 were patented, with the year ending with a total of almost 471,000 units shipped, according to the latest report from ACARA Motos, the dealers’ chamber.
In this turbulent December, more motorcycles were sold than in the same month in 2022 (29,383 patented units). In the industry, however, they emphasize it The record represents a sharp slowdown compared to previous months. “We were delivering between 40,000 and 42,000 units per month,” clarified a qualified industry source. Manufacturers and retailers plan a 25% drop in the year, for the same reasons as for household appliances. The increase in prices and also in financing.
Building materials are also affected by the shock. The latest Construya Index, which measures volumes sold to the private sector of home construction and renovation products, recorded a monthly, seasonally adjusted decline of 14.8% and It was 17.4% lower in December 2022. In this way the cumulative data from January to December closes with a decrease of 7.9% compared to the same period of the previous year.
“This is the product of the uncertainty associated with the change of government, something that will likely persist through the summer,” explain the authors of the report. The index measures the volumes shipped produced by leading companies in the sector: ceramic bricks, Portland cement, lime, long steels, aluminum carpentry, adhesives and pastes, waterproofing paints, toilets, boilers and domestic and heating systems, taps and pipes of water conduction, ceramic floors and coverings.
The reality of car dealerships is similar: during the year, according to ACARA data, the sector chamber recorded 449,438 km 0, which represent an increase of 10.2% compared to 2022. But the situation had an impact in the last month of the year. Last month , 18,498 units were patented, which is a decrease of 6.2% compared to December of the previous yearA. But the most worrying thing is the drop compared to November, in which 35,981 cars were registered, i.e. 48.6% more than in December.
At ACARA they recognize that “We will have a business with a tendency to slow down, which is why we are correcting the projections we hadIn the automotive sector, it is expected to close the year with 340,000 units sold (110,000 less than in 2023) and it cannot be ruled out that this projection will subsequently have to be revised downwards.
Source: Clarin
