Economy Minister Luis Caputo ruled him out on Wednesday a strong jump in the dollar and asked the CEOs of large mass consumer companies accompanying” signs of a slowdown in inflation, during a meeting attended by the sector worried about the sharp decline in sales in leading brands, affected by the adjustment plan and the recession.
Caputo summoned them at 2.30pm to the Palazzo del Tesoro with the aim of “listening” to their diagnosis on the state of the situation. In this context, the executives signaled that “there is no massive collapse in activity”, but they warned In some categories the retreat of operations “looks strong” and from then on they showed their concern for the increase in costs due to inflation.
The government invited food, beverage and personal care manufacturers, such as Las Tres Niñas; Mills of the Río de la Plata; Mills of Cañuelas; QuickFood SA; Las Marías factory; Procter&Gambling; Johnson & Johnson; Arcore; Mondelez; Mastellone; The true; Danone; Unilever; Industrial brewing company; Coca Cola; Nestlé and Quilmes.
These are the items most affected: while retail sales in SMEs fell by 25.5% annually in February, Food and beverages decreased by 33.3% due to sharp price increases in recent months, according to CAME. The inflationary shock has led consumers to stop purchasing top-brand soft drinks, juices and waters and has reduced both the production and demand for meat.
Accompanied by the Secretary of Commerce, Pablo Lavignethe minister tried to remain calm and assured that the program “has begun to show results” thanks to the slowdown in inflation, based on the strong fiscal adjustment and the “improvement” of the Central Bank’s balance sheet. Government expects inflation to fall to 15% in Februaryafter falling to 20.6% in January.
Companies have recognized this “Price increases in February and March began to steadily decline”. The decline is explained by the sharp drop in incomes and the recession in a context in which the economists participating in the survey of market expectations (REM) prepared by the Central Bank (BCRA) estimated a drop in GDP of 3.5% in February in 2024.
However, several consultancies warn that this downward trend will stop in March and may even resume raise the consumer price index to a level close to 20% due to rising rates in public services and the possible recovery of salaries in the face of pressure from the unions. Businessmen were particularly concerned about the impact of a possible rise in the official dollar.
“We are working hard to ensure there are no imbalances in macro variables that could influence production costs, we are taking care of that I am aware of the importance of the value of the official dollar for mass consumptionWe don’t see ahead no sudden devaluation and we wait that accompany the prices”Caputo responded.
During the presentation, the minister reviewed the measures of “de-bureaucratization and normalization” of domestic and foreign trade, such as the non-renewal of the Fair Prices program, the repeal of the laws on supply, on the gondola and on the Price Observatory , the termination of trusts and the repeal of information regimes which “only increased costs”.
Caputo tried in this way to instill optimism among entrepreneurs, who They have filled promotions and discounts to compensate for the drop in consumption in the most affected sectors. And he underlined the importance that list prices “faithfully reflect market conditions”. The fact is that in other categories, such as grated cheese, increases of up to 25% are recorded in March.
Without price controls, the economy tries to stop inflation with a “depressed” official dollar and income liquefaction, a policy that is difficult to sustain over time and that could get more complicated if stocks were raised or the Central Bank stopped accumulating reserves. “They talked about the decline in sales in general and the minister asked them to believe in the plan, that there is evidence that we are doing well,” summarized one businessman.
Source: Clarin
