The basement auditorium of the Kirchner Cultural Center was overflowing with people while the Minister of Economy Sergio Massa and the Secretary of Commerce Matias Tombolini announced the details of the new stage of the Fair Prices agreement, with a path of increases of 3.2% per month from now until June 30 for nearly 50,000 products. And a basket of about 2,000 products that will maintain their fixed price.
Fair Prices: the Government extended the agreement with monthly increases of 3.2% and included the fees of private schools
Massa presented the second phase of the program at the CCK, with smoother climbs, more products and more digital controls than face-to-face; the provinces that allowed higher increases in the fees of subsidized schools will reduce them until June
They also presented the new digital tools that will allow them to carry out more online controls and fewer face-to-face inspections. “For those who don’t like to see people with bibs in supermarkets,” Massa ironized after the controversy over the participation of unions and social organizations in price controls.
The officials shared the stage with a group of about 25 businessmen and managers of food, beverage, household appliances and footwear companies. Several of them told, a while later, that the agreements – which are voluntary as Massa and Tombolini remarked – will only be signed next week. And that the products that make up the list are still in the negotiation stage, but they estimate to arrive with the complete list by February 7.
Inflation: the Government will renegotiate all price agreements seeking to unify terms and impose a ceiling of 3% increase per month
Economy wants to anticipate the start of the next stage of Fair Prices and will include mass consumption products but also gasoline, clothing, materials and inputs for the industry. The companies reject a guideline of increases of less than 4% per month that is currently in force
Among the businessmen were Lucía Urquía, director of the AGD oil company; Julio Freyre, president of the CCU beverage company; Pablo Lemo, CEO of Adidas; Daniel Awada, CEO Cheeky; Mariano Navelli, owner Don Satur; and Hernán Grimoldi, from the Grimoldi shoe company, among others. This time the number one supermarket chains were absent, such as Alfredo Coto and Francisco De Narváez, who had been at the launch of the program last November.
The spirit of the businessmen was certain resignation for recurring themes. In reserve, they point out that the agreement is voluntary “halfway” and show their doubts about the real possibilities of sustaining prices in such a long term -five months from February to the end of June- in the midst of rising inflation and economic uncertainty and while the they bear the increase of their own costs.
Fair Prices: Companies seek higher increases for products that have been left far behind by inflation
Items in the basket with fixed prices that were furthest behind the rest could leave the program and have increases of 9 percent
Why half volunteer? Why being part of the agreement allows them to access dollars for imports supplies faster than companies that are not part of the program.
“They are effective agreements in the short term, but not beyond. And this deal is now extended, it’s 8 months if we count since it launched last November. The sheet is always short”, they explained. Some executives also maintain that the cost of their raw materials is impacted by the drought and that this drives up their prices.
They were also surprised by some criticism from the Minister of Economy who spoke of companies that “cheat” the State with over-invoicing or under-invoicing to obtain more dollars. “We learned from previous mistakes. This new stage has more prizes and more punishments. The companies that are in the agreement have faster access to dollars to import and a subsidized rate to increase their production,” said Massa.
The businessmen also had their voice during the presentation: “It is not the industrialists who generate distorting factors,” he defended Daniel Funes de Rioja, president of the Argentine Industrial Union (UIA) and of Copal, which brings together the chambers of food and beverage producing companies. “In 2022, the ex-factory prices of the products rose less than inflation,” he pointed out.
Always friendly, Funes de Rioja stressed the importance of collective bargaining and the need for stability and predictability. But he also launched some criticism of the mayors -several parties from the suburbs were present- about the municipal taxes that increase costs. The accumulated tax burden, as he detailed, is 38% on food and 47% on beverages.
Massa announced that the mayors are willing to get together with the supermarket chains to see how to “divide the effort.” Large-area stores have municipal tax payments of different values in the municipalities of the province of Buenos Aires. Among the mayors who participated in the presentation was Mayra Mendozafrom Quilmes – who spoke with the Secretary of Industry Jose De Mendiguren-, Federico Achavalof Pilar, and Andrew Watsonby Florencio Varela.
With each announcement of a new price agreement, questions about supply arise: will the products on the list be on the shelves next? The data handled by the Secretary of Commerce is that today compliance in stock is around 70%. Of every 10 products, there are 3 that are not found in the gondolas.
However, from the mass consumption companies they also highlighted that the agreements have been fulfilled in recent months, when the increase guideline was 4% per month. “When those prices increase more than the guideline, the supermarkets do not receive the lists and inform the Secretary of Commerce. That’s how it works,” they said.
In this new stage, the Government is betting more on the path of increases of 3.2% and that the basket of fixed prices, which is very small compared to the number of products that exist in the market, is less relevant.
Still, the weak point of price agreements remains the amount and types of trade they cover. In the case of mass consumption products, they are only available in large supermarket chains and cannot be found in self-service stores or small local shops that are usually the place where lower-income families buy basic products.
“The prices of the wholesalers are also controlled. We arrive at local shops and self-services with the prices of the wholesalers. At one point, if it goes up too much, everyone goes to the supermarket,” Tombolini said after the presentation.
Massa also highlighted that since the agreements were implemented, hypermarkets, large chains and wholesalers have increased the sale of consumer products by 6%.
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