In the midst of the decline in consumption, Caputo promotes the “reduction” of prices in supermarkets

Fascinated by the format of prices in supermarkets, the Minister of Economy, Luis Caputo, once again promoted this Thursday on his social networks the signs of apparent reduction of a retail chain, after the complaints and the measures taken to ensure that the sector would lower prices, instead of offering 2×1 promotions, as they are not reflected in the inflation measured by the INDEC.

“Jumbo lowers the prices of all its own brand products (more than a thousand products) and maintains them for 60 days,” Caputo said on the X network, along with a video from the Cencosud group company itself in which it announces a reduction. 15% for own-brand products, a growing trend in recent months with the decline in sales (in January it was 13.8% on an annual basis, according to INDEC) and the transition to second or less expensive brands.

The government insists on the fact that the inflation index does not fully reflect the drop in prices (in February it was 13.2%) and that, if it were not for quantitative promotions and the resistance of producers to offer a higher unit price low, the index would be even lower. In a recent interview, Javier Milei assured that if the statistical brake and delayed rate increases were “cleaned up”, “inflation would be in the order of 7% monthly.”

Consulting firms forecast inflation of between 11 and 13% for March, a lower decline than that seen in previous months and still far from official expectations of reaching the single digits. This difficulty was what increased tension last month, before the February data was known, when Caputo summoned supermarkets and FMCG CEOs to complain about “excessive prices”.

After these meetings, in which the minister ruled out a new devaluation and objected to companies from setting prices with one dollar up to 2,800 dollars, the executive went ahead by reducing taxes to import a basket of almost 3,000 products and some supermarkets have started changing their offers, as highlighted by Caputo weeks later in a photo post with the “before” (2×1) and “after” (discounts of 30 to 50% per unit).

While it is difficult to measure the impact of these changes, EcoGo estimates that the new decision by some supermarkets could result in a reduction in inflation of between 0.4 and 0.8 percentage points in March. “This change would have a one-off effect and would not affect backward measurement,” the consultant said. The incidence seems lower, but it could help bring out a number closer to the expected one in official dispatches.

As Clarín learned, Caputo frequently monitors the Electronic Price Advertising System (SEPA), a mechanism created in 2016 under the direction of Mauricio Macri that reports current retail prices daily at each point of sale of mass consumer products (from food to building materials), without including local businesses or warehouses, and without the rigor of INDEC measurements.

This indicator showed food inflation falling below double digits in March. Private metrics also show a slowdown in the food and beverage sector in the final weeks of March, while still reflecting an increase of about 11% monthly. “We saw that two things work: they were stocked and priced at a higher price, so now they are sold out and there is a lack of consumption,” official sources said.

In other words, some prices have dropped due to the recession and the sharp drop in sales, which means there are products with an imminent expiration date. The Secretary of Commerce, Pablo Lavigne, and the Undersecretary of Consumer Defense, Fernando Blanco Muiño, gave a detailed report in the meeting they had two weeks ago with Fernando Savore, vice president of the Buenos Aires Druggists’ Federation.

In the industry, several mass consumer manufacturers acknowledge that their sales are “down double digits” compared to last year. But they keep their 3×2 or second unit offerings at 70%. “In our case there is no loss of price lists, there is a lot of commercial dynamics and numbers in the furious red”, underlined one company. “Price reductions? In reality there is a lot of promotion because sales are declining,” they slip.