Food: the other gap that worries the government

For the first time in 7 months, the increase in food and drink prices in May (4.4%) was below inflation (5.1%), the Indec disclosed yesterday. However, a study by consultancy Scanntech (which looks at self-service stores and local businesses) found that commodity prices increased by 5.1% and accumulatean increase of 24.1% in the first five months of the year“.

The data is particularly relevant because the price and the sales gap between large chains (where Price Care is concentrated) and independent shops and supermarkets getting bigger and bigger. This is exactly what it is one of the most troubling problems to the new Secretary of Commerce, Guillermo Hang, who has started negotiations with companies and food producers to renew the main regulated basket.

The price difference between the channels distorts all business logic. It happens that Care Price, the specialists agree, works like promotions: attracts the public in large shops (among others Carrefour, Jumbo, Coto, Changomás and Día) and it takes away volume from neighborhood stores, supermarkets and shops. Even companies often find cheaper products in chains than in wholesalers.

Not surprisingly, then, supermarkets gain market share at the expense of department stores. This is indicated by a joint study by the consultancy firm Focus Market and Scanntech sales in that channel fell by 6.7% in May, and that register falls for the fourth consecutive month.

Damián Di Pace, director of Focus Market, clarified that last month consumption slowed the decline compared to April. “The bonuses granted by the IFE, the adjustment to retirees and retirees and the joint opening have allowed sales to increase in volume, but they still record year-over-year declines. The acceleration of inflation does not stop compensating for the income level of the Argentines, “she said.

The price gap and sales are closely related. Hang himself acknowledged that the two baskets intended for local businesses (60 products each) did not work and invited producers to submit proposals to reverse the situation.