Inflation does not ease, expectations rise and consumption suffers even more at the bottom of the pyramid

As economists raise their inflation expectations for this year and it’s gone in just one month, 65% to 72.7%price growth is becoming more and more The economic situation of consumers with fewer resources is more critical: the base of the population pyramid on which the 27.9% of families who are below the poverty line.

According to the classification of consultant Wit is the lower class that contains 28% of the population and the upper lower class (22%) who live the harshest reality: an overwhelming everyday life, linked to survival and informality, which thrives on “changas” and thanks to social assistance. Families who clearly cannot cover the cost of a Basic to Total Basket (CBT) with their own income, now estimated at $ 95,260, according to the latest official data.

Faced with the precariousness of income, in many cases tinged with informality, the consumption of these families has been drastically affected. especially because food, which accounts for between 40% and 50% of these families’ spending, has risen above inflation: 58% against 61.2% for food and drink. In the more affluent classes, however, the weight of the canguito is 20% or 25%.

Sebastian Corzo, Marketing Director of Kantar Insights Division believes that these consumers who form the bottom of the pyramid are the ones who have suffered the most from the pandemic and quarantine, and it was not possible to recover: “Many have an informal job or an irregular income. And today They are the ones who suffer the most from inflation. because food increases more than average, and in the low-level basket, food has more weight, ”he explains. At the same time, it’s a very distant segment from recreation and entertainment expenses, ”she describes.

In this regard, the analyst Guillermo Oliveto, head of the consulting company W, warns that there is “One market and two realities”: “On the one hand, the upper middle classes are the strata that have had the most rest and have best tolerated the pandemic and quarantine. And now I’m in a situation of “Consumption of revenge” because inflation favors that: the pesos burned and the installment payments are imposed: People have the feeling that, in the face of such inflation, taxes end up being paid by the system, ”he says.

“But, on the other hand, there is the great impact of 2020 on the lower classes and on a part of the lower middle class, which is in an intermediate situation and could very well be included in the 50% of the people who are worse off. Because in this group, with informal wages that couldn’t keep up with inflation or lack of work during the pandemic, they had to sell something good: a motorcycle, a car, or ask for some credit to survive. at that time, “the analyst described.

“Even if today there is less unemployment (7%) informality has grown and this group has no way of getting what you had before, with which he has a loss not only of consumption but of the quality of life “. However, taking into account the total of the pyramid, the purchasing power of households – at least until the fourth quarter of 2021 – remains below the levels of 2019, adds the analyst.

From Nielsen, Javier Gonzalez adds that “although inflation is nothing new for the Argentine consumer, what we are seeing is a deeper look at the search for offers and discounts in the upper middle class. In some cases, pending to cheaper brands.. Also, the lower class is the one who goes the most in neighborhood shops and businesses where they do buy smaller, more basic foods, trying to spend less despite the fact that prices are more expensive in this channel. “The feeling of buying 3 or 4 items means you are spending less than you can at the grocery store,” she says. Also, in the interior of the country we see a consolidation of brand B categories, with much more accessible prices than the first brands, He explained.

Focus Market analyst Damian Di Pace also suggests that, in the lower classes, for every $ 100 spent, $ 40 corresponds to mass consumption: food, cleaning, hygiene and toilet “They try to take refuge in the sock but they can’t do it because they live almost every day. For this reason they stock up on nearby ports, despite the considerable price difference compared to the large chains where Careful Prices can be obtained.

Regarding the evolution of prices, Di Pace adds: “just as food prices were rising sharply in March and April, In May, the categories related to personal hygiene increased more: diapers increased by 29%, deodorants by 17%, toilet soap by 15.3% and kitchen paper by 11%, among others. That is to say, they are very strong increases for a sector of the population whose income level is informal, without parity or the power to recover purchasing power “.

In recent years, according to the analyst, “the base of the pyramid and the containment policies of the state have grown they could not reverse that process. We have less paid work than in 2011 with more population. With which there are more people outside the formal system of the economy and the low socio-economic sectors suffer greater vulnerability.