A good men’s shirt in New York can cost $50; in central Buenos Aires, from US$65 and up.
Name-brand running shoes in Miami can reach $150; yesterday in Buenos Aires they were offered at 165 dollars to the point that Even tourists looked at the prices in amazement.
The fact that a liter of milk, a piece of bread or a bottle of soda of the best brand costs are more measured in dollars in Argentina than in the United States or Spain It is part of the price landscape of the last few weeks.
Inflation in dollars is advancing due to the increase in the cost of living in pesos and the decrease in free dollars, to the point of leading the Government to formulate very controversial comparisons.
On at least three occasions in recent weeks, Javier Milei he put another face on dollar inflation when he talks about the level of retirements.
The President assured that, at the time of his inauguration, pensions (average, that is) represented 80 dollars and that now, with the bonus, pensioners started earning $200.
It’s a calculation valid from a mathematical point of view, but risky for millions of members of the passive class who had a violent loss of purchasing power in the months of December, January and February in the heat the devaluation that triggered the increase in the cost of living.
The dollar inflation that Argentina is experiencing responds to strong crossover of variables between the retail price index and the blue dollar.
In January inflation – or the persistent increase in the cost of living – was 20.6%; in February 13.2%, while the the blue dollar fell 16.4% in the period.
The conjunction of an increase in the numerator and a decrease in the denominator generated the increase in prices measured in dollars. And, again, in a particular context regarding the rebranding of the main consumer products.
The price board in pesos is currently the subject of a significant review by the company’s directors, who at the end of 2023 had to face a sharp increase in inventories to protect against devaluation and now they face one too sharp decline in sales.
The conclusion of a secret meeting of CEOs of large companies earlier this month was that, on average, Sales fell between 25% and 35% in the first two months.
Part of this decrease is justified by fall in the purchasing power of pensions and salaries; the same for the recomposition of relative prices (increase in fuel, tariffs, food after the December devaluation) and also for the private sector strategy of recomposing sales margins.
In other words, in the heat of devaluation and price liberalization, companies maximized raises. The problem is that they are now full of products that they cannot sell at the prices the market can absorb.
THE lowering prices is a chapter that is not part of the ideology of Argentine entrepreneurs, accustomed and trained to the heat of inflation and official controls that have now vanished even if, for many, the exchange rate remains a containment dam to keep “water” in sales prices.
The decline of the dollar also did not figure in the manuals, as well as in the polls, such as the latest one by Poliarquía, which indicates that “the presumption that the country’s economy will improve in a year has gone from 45% to 49%, the highest value since the end of 2017.”
And this optimism occurs in a context in which household economies are strongly affected by the adjustment.
“54% of those interviewed say they don’t have enough money” and one of the biggest economic fears appears very palpable: “69% are very or somewhat worried that someone in the family could lose their job.
In the first 100 days of administration, the Milei government obtains the approval of the financial market: the recovery of securities is strong, even of shares and the drop in the dollar reflects that it believes in what is presented as the main postulate: having zero deficit.
And this result is consistent with the the idea that inflation had begun to decline and that the goal of having single-digit inflation in April is presented as possible.
Markets celebrate and entrepreneurs support the results of the first 100 days. However, they also came to a tangible conclusion: They do not intend to increase investments until the President convinces Congress to pass some of the laws that the Government considers essential.
A certain level of political coexistence resultsaccording to entrepreneurs, It is essential to think about increasing private investments and to be able to compensate to a certain extent the sharp decline in public investments signaled by the liquefaction and the presidential chainsaw.
Entrepreneurs applaud the fiscal surplus, but they also want to see How politically sustainable is the Milei project?a President who says he communicates directly with people through social networks and demonstrates his conviction the shapes are not important to achieve political objectives.
These businessmen want to see how the noise shakes out before they think about investing. Has another time for the bold come?
Source: Clarin
