The inflation effect of securities: an involuntary but also inexorable impact

It is already known that the trap is not harmless. In fact, it reduces the supply and variety of goods, mainly imported, and limits investments. There is another impact, as involuntary as it is inexorable, which is the inflationary one. Recent restrictions put more gas into prices for two main reasons: the higher financial cost and the high uncertainty of the measurements. Thus economic components and social behaviors acquired over the years are mixed.

“Inventories limit imports and that is why there are fewer goods in the economy. There is less availability and variety of products ”, explains Guido Lorenzo, of LCG. The economist gives the example of the automotive sector. “When you import fewer cars, what happens is that used cars increase”, He concludes.

Strengthening import barriers drives up business costs, which are eventually passed on to prices. To import, a large company must finance itself for 180 days, in dollars. “Any option (commercial credit, bank credit or even from its parent company) it involves taking on debt, and this costs money”, Underlines Ricardo Delgado, of Analytica. That is, an additional fee is paid for the loan.

But the bill doesn’t stop there. North American inflation should be calculated on this value, which could be close to 10% per year this year. To this is added the repayment of the credit in the same currency, but which is purchased with pesos, as long as the Central Bank delivers the foreign currency in a timely manner. “To guarantee it, the future dollar can be used, which also comes with a cost. But since it’s 180 days, there’s also a currency risk, ”says Marcelo Elizondo, an international trade specialist.

To neutralize any write-downs you take insurance coverage. Another expense, which increases the bill. That in the case of companies that turn their backs to obtain financing. Basically, these accounts are the ones that are made to calculate the cost of replacing an item or a spare part. “The youngest, everything is done by eye”, Say the connoisseurs, in an equation in which real increases and other speculative aspects are mixed.

On the latter aspect, Elizondo points out that behind everything there is “the fear of releasing a product whose replacement is uncertain”. In this uncertain context, many companies, producers and suppliers even prefer not to sell (stock up) “because the only way to have dollars today is to have products“. Seen from the outside, it seems to be a reprehensible practice and beyond all logic. However, many consumers buy goods (cars, washing machines or bicycles) due to the inability to buy dollars.

Shortages – notorious in many industries, such as tires or shoes – exacerbate the problem and put pressure on prices. “The lack of imports ends up thinning the market. There is also the cost of uncertainty, because many companies fear that the crisis will worsen and that this will also affect production, ”adds Elizondo.

On this point Delgado agrees and adds a final factor: “The exchange rate gap is also inflationary because it reflects the expectation of a devaluation,” he says. The economist also points out that there is a very close relationship between the two variables.

“In the second half of last year, when it was stable around 50%, inflation flattened out. When it moves, the market believes that in the long or short term the Central will devalue and just in case the players cover themselves “. And replacement costs also increase.

Experts say rising inflation is the option the government has taken to keep business and not completely turn off the tap on imports.