Argentinians have historically had a high tolerance for inflationary pressures. However, the price run that occurred in December together with the change of government, combined with the peak of 25.5% recorded in the consumer price index (CPI), exceeded all expectations and The pocket began to show its limits.
Cutting family expenses, through the implementation of various strategies, covers all socioeconomic levels. However, a work by consultant Fernando Moiguer entitled “From “weight burns” to “weight is not enough” focused on the resignation of consumption in the middle classwhich according to the study “shows the most acidic assessment of the country’s present”.
A first ingredient analyzed among consumers is social humor, That is, the opinions that society has on the country’s situation, on its personal situation and on its consumption capacity.
In January, 65% of those interviewed in this study confessed to being “pessimistic”. This level of negative social humor was higher than the historical average measured by the consultancy between 2018 and 2023, when that percentage reached 58%.
In particular, differences are noted depending on socioeconomic groups, as pessimism is more evident among the typical middle class and the lower middle class (70%).
Another variable that passes through social humor and the predisposition to cut expenses because income is not enough it is the instability of workwhich is starting to appear as a clear concern for these segments.
When prompted: What is your perception of your work future and that of your family in the next six months? Responses referring to “instability” covered a larger proportion of people than in previous studies, with the lowest levels being the most concerned. Albeit with a greater growth in average levels compared to previous years.
In this context, purchasing power is significantly affected, according to the report. “Half of families today have debt and use savings to cover daily expenses,” he explains.
Of the 47% of those who had to use savings to meet daily expenses, 28% started doing so in January and another 19% have already done so in the previous months. In short, Middle-class household debt increased 10 points from a year ago.
One fact about banking institutions that can be linked to people’s need to use their savings more is that theyPeso deposits in banks fell by 30% in real terms in 2023, i.e. discounting an inflation of 211.4% for the year, according to a report carried out by the Association of Argentine Banks (ADEBA).
The elements that descend
During the analysis what each segment of society has stopped consuming, Moiguer’s study had an average of seven elements that intersect all levels.
The first refers to a change in the way we purchase household products. In essence, people have begun to buy the so-called “white brands” in supermarkets, which happens in 60% of homes, reaching almost 70% in the middle class.
Supermarket chains recognize that user consumption of their own brands has increased by 65%. Partly because the chains themselves are taking the opportunity to expand the variety of their labels at a time when shoppers are demanding cheaper alternatives. The truth is that billing comes from sales of your products It represents 30%, when until five years ago it did not reach double figures.
When planning purchases, an average of 3.5 saving strategies are adopted. While the middle class diversifies purchasing channels and replaces going out with homemade food, the lower class begins to do so limit in food. This reached one in three families.
The second element is that 50% of consumers stop buying meat and barbecue. The third element where changes are made is that They stop going out to eat: This reaches 30% of families and exceeds 40% of the middle class.
The fourth item, which covers 24% of the sample, is the resource of “cancel entertainment platforms”. The fifth strategy indicates that people “stop using your car or motorbike”, because fuel prices have increased by more than 150% in the last two months. This restriction reaches a quarter of the sample but exceeds a third in middle class families.
The sixth entry in the ranking of “abandonments” of the population is that of “Go drink some coffee; a habit that reaches even a third of the middle class”. And finally, the last element shows a predisposition of people to Don’t take so many taxis, Remises or to use the more well-known urban transport platforms. This covers 21% and is higher in the medium and medium-low sectors.
This overview of consumer behavior also shows, as summarized in the title of Moiguer’s work, that People went from a 2023 in which they did not stop consuming because holding pesos was synonymous with losing due to inflation, to the feeling that, due to the sharp increase in prices, there will not be enough silver to make ends meet. Therefore, you need to take care of it. “This is a phenomenal change and it happened in less than 60 days,” analyzes Moiguer.
This increase in consumption during 2023 reached its highest point in December, when many “advanced consumption” against devaluation and price increases. According to data managed by the consultancy firm NIQ, the peak consumption in the evolution of daily sales occurred between December 23 and 24, representing $40,000 million.
With the arrival of the new year and the liberalization of prices decided by the new management, the decline in consumption has accentuated and has also been felt in tourist cities. For this reason, this summer shorter stays and cost reductions are recorded, which are reflected in sales in supermarkets or in shops and gastronomic establishments. In fact, Moiguer’s study shows that 57% of middle-class families said they would have to do so this summer reduce the holiday budget (38%) or cancel it altogether (19%).
As regards mass consumption, 2023 ended with a positive result: sales in supermarkets and self-service restaurants recorded an average increase of 2.4%, according to the survey by the consultancy firm Scentia. In December, despite the rise in prices, the increase in consumption was 1.4%. In January, however, there was a drop in sales in supermarkets in the first fortnight of the month, by 12%. For this year, projections from consultancy firms that analyze Scentia data indicate that the contraction in consumption will be 7%.
AS, Consumption will be one of the items that will decrease the most during the year and it will increase the decline in overall activity, which consultancies see at 2.6%, according to the survey of market expectations published by the Central Bank.
However, despite the negative outlook of the present, it is there among consumers “a promising long-term prospect”, according to Moiguer. “The feeling of the future is decreasing, but it is positive. People today see a very negative reality, but they feel and have important short-term hopes that the situation can improve”, says the analyst.
Source: Clarin
