“Prices will continue to fall”, the minister promised days ago Luis Caputo. Even if the official keeps this commitment, the truth is that the dollar is falling, but prices continue to rise.
The Government scores like a cucarda the decline of parallel dollarswhich so far this year have only increased by 7.6% in the case of cash with liquids, while the blue closed at $995ten pesos below the price with which 2024 began. Despite this decline There are prices that continue to accelerate. In particular, the minister is concerned about what is happening with food. After the slowdown in February, At the beginning of March they regained momentum.
According to the report by the consultancy firm LCG, The first week of March ended with inflation of 3.6% in the food and beverage sector, which represents an acceleration of 2.3 percentage points compared to the previous week. Therefore, the increase averages 11.9% over the last 4 weeks and 12% point to point over the same period.
Among the food products with the highest weekly increases are dairy products and eggs (9.4%), fruit (8.82%), ready meals (6.52%) and vegetables (3.83%).
Last Wednesday, Minister Luis Caputo summoned representatives of the main food companies. “Excellent meeting yesterday with consumer goods producers. It’s a coincidence prices will continue to fall and that it is important to make the real unit price of products transparent so that they can be adequately captured by Indec,” the head of the Treasury Palace said in a post on his X account.
Caputo’s analysis is that many companies raised prices anticipating that the inflationary leap would be larger than it actually was. “Today they have very high list prices that most people don’t validate.and that they have already begun to lower them, but through promotions, such as the ‘60% discount on the second unit’ or even the ‘2×1’”, explains Caputo.
“Although these discounts are not captured by Indec due to its logical way of measuring the unit, They are a clear sign of inflationary deceleration“, said the minister.
The economist Martín Kalos, of the consultancy firm EPyCA, underlined that “for several months food has shown a dynamic in which in the first week of each month they accelerate. “This is about the behavior of companies waiting until the 1st of each month to send price lists.”
“In a high inflation regime like the one that has existed for a year and a half or two, prices react to several variables, not just one,” like the dollar.
Thus “in December food prices increased in step with the devaluation of the official dollar, but in recent months We are seeing companies bring forward planned energy increases, For example. Furthermore, inflation remains high, although it slowed a few points in February,” Kalos said.
To this we must add that”There is no competition from imported products yet to calm these increases.
“Food inflation cannot be separated from inflation in general. A limit cannot be placed on certain prices while others accelerate”, adds the economist.
Kalos explained that with the devaluation of the official exchange rate at the beginning of Milei’s management”There were precautionary increases by many companies that exceeded December inflation. But with the data for January and February it is difficult to think that prices have not adjusted. Today the problem is that they don’t sell because the market is depressed and they resort to offers like 2 for 1 to get revenue to cover fixed costs or in some cases increase sales volume.”.
However, Kalos pointed out that companies have been using this marketing resource that Caputo refers to for years. ““There is no evidence that there are now multiple levels of discounting or that the index does not reflect real inflation.”.
And he stressed that querying the INDEC when inflation rises is a common practice. “Other governments have also complained that INDEC has measured inadequately, and this has never been true, except in the period of Guillermo Moreno. Cavallo and Lavagna have also published parallel indices with their own measures of inflation.”
According to the consultancy firm Equilibra, there are specific and seasonal factors that push inflation in March, one of them is “the impact of Easter on the consumption of certain foods such as fish and chocolate”.
Source: Clarin
