As happened in previous economic crises, Argentine consumers are once again reworking old survival strategies to cope with high inflationary pressure.
Here’s how, among the resources to extend the family budget, The reduction of living expenses has become effective again. That is, the need to reduce living expenses as much as possible, essentially adapting the purchase to the money available.
“Now, “People don’t sort products by weight but by units,” says the owner of a greengrocer in the Villa Crespo neighborhood. “Customers buy what they need every day because with prices so high no one can afford to throw anything away,” says the trader as he weighs three peaches on the scales.
This is a logic well trained by local buyers, taking into account the various economic crises that the country has gone through. This year, the December devaluation and full price liberalization, among other factors, He found people with much worse wages, which are always adjusted for inflation.
In 2023, price increases reached 211.4% year-on-year while salaries, through November, appreciated by 142.7%, according to official data. And with inflation of 25.5% in December and 20.6% in January, the situation has become more critical.
This loss of purchasing power, which encompasses all social segments, once again the deployment of new resources in front of the gondolas has been oiled. Especially since the situation due to the increase in food competes with other services such as school, prepaid services, electricity, gas and fuel, among others.
The first observation that consumer analysts make – due to the deterioration of purchasing power – is the greater frequency with which purchases are made, in which, moreover, fewer products are purchased.
“Supply purchases are largely a thing of the past, as the economic situation does not allow for high levels of planning as before and the monthly purchase starts to disappear even at higher socioeconomic levels,” reflects Juana Merlo, owner of the consultancy firm ShopApp.
In one of the latest works of the consultancy company, it was found that “only 50% of consumers know how they will move inside the point of sale (supermarket, warehouse or self-service) and They try not to be tempted. The traditional “shopping list” is no longer used and purchases are also fewer,” adds the analyst.
A recent study conducted by Moiguer Strategy Consulting summarized a handful of habit changes it is implementing the middle class struggling with economic restrictions: the move to white labels or secondary brands; less meat consumption (a decision that today concerns 50% of families); gastronomic outings, the withdrawal of streaming platforms and even the reduced use of cars or motorbikes due to the increase in fuel prices. Even going out to “get a coffee” has been reduced by a third of the middle class.
According to ShopApp, “price is a changing factor in three out of 10 cases and occurs primarily at higher socioeconomic levels. As for “innovation, it is men who are a little more encouraged,” the study underlines.
All these changes in habits are framed in a situation of general decline in consumption which has been evident since January. In this regard, Javier Gonzalez, analyst at Nielsen IQ, underlines: “what we are seeing is a general decline in consumption driven in principle by some leading brands”. An equally important fact is that, In January consumption on the coast fell by 15% compared to the same month last year,” commented the expert.
Some private consultancy firms predict that consumption will end up with a 7% decline in 2024. This would come amid a decline in the level of activity of 2.8%, according to IMF estimates.
Source: Clarin
