Unlike other setbacks suffered by the economy, the fall in mass consumption did not surprise the officials of the economic cabinet. The lower volume of sales in stores seems understandable and logical in the midst of the sensible drop in purchasing power of the population.
According to the latest monitoring by the consulting firm Scentia, mass consumption -basic basket products- fell 1.1% in February compared to the same month last year. The comparison of the first two months of 2023 shows a contraction of 1.4%.
The recessive trend is very strongly evident in small neighborhood businesses -supermarkets and stores-, in which sales show a deterioration of 8.9% compared to a year ago.
Consumers went to supermarkets, which have “Fair Prices” products on their shelves, the only control program managed by the Government. For this reason, large chains sell the same items up to 50% cheaper than small businesses.
The inflationary acceleration It made that difference widen over the months. What happens is that the companies that manufacture food must comply with the corridor of increases agreed with the Government -up to 3.2% per month- while that limit does not exist in the so-called traditional businesses, where official controls do not apply.
That question is very tense now.
Hit by the drop in consumption, companies await results from Massa’s management.
Companies, on alert for inflation
A couple of weeks ago, the food manufacturers left the first alert in the office of Matías Tombolini. They warned the Secretary of Commerce that they would not be able to meet the cap on increases of 3.2% if the Government did not fulfill its promise to enable imports through the channel of official dollar fluidly.
In recent weeks, there have been claims: businessmen assure that the government is blocking imports.
And they warn that if this dynamic persists, then they will not be able to comply with what was signed when “Fair Prices” was relaunched. The claim refers to the fact that, just as in December and January there was a good import dynamic, the obstacles had returned with force since the end of February.
In the companies there is conviction that the next few weeks will be key.
Some leading companies work with the idea that after Easter one opens new instance with the government.
Specifically, that if the inflationary dynamic does not cool down and that if Sergio Massa does not give more fluidity to imports, there won’t be too much space for uphold price agreements.
Prices do not stop and the March surveys are worrying.
The Government has already announced that March is coming with a sharp rise in prices, especially in services that had been left without increases at the beginning of the year. At the beginning of this month there were adjustments in transportation, electricity rates, prepaid and private schools. All this combo, added to the increase in food would give a CPI of around 7%.
The last report of Eco Go, which weekly monitors the evolution of prices, foresees a 7.6% inflation in food for this month. Above the 7.0% that the consultant estimates as March inflation.
Faced with this reality, businessmen argue that they cannot continue with a program that provides for a monthly price adjustment of 3.2% when inflation in that same sector is more than double what is authorized by the Government. “It was an agreement for another economy,” the executive of a leading food company asserted in dialogue with iProfessional.
New economic scenario: reviews with businessmen and bankers
In recent weeks it has become clear that there is a new economic scenario. The inflationary acceleration in the midst of the loss of dollars puts additional pressure on an economy that has already been battered.
The last records of the drought require a full review. They are, up to now, some US$20,000 million loss in exports that will be impossible to compensate.
The economic scenario changed. It is not the same as it was a few weeks ago, when the effects of the drought were already being computed, but not with the damage it is causing.
Crossroads: reserves fall and companies demand dollars to import inputs.
There will be no lender of last resort to save such a loss. Neither the agreements with China nor with Brazil, nor the Monetary Fund itself, which up to now has only agreed to a relaxation of the BCRA’s reserve goals, in exchange for a deepening of the adjustment.
The IMF is not willing to offer any additional dollars to help Argentina alleviate such a suffocation. At least for the moment.
uncertainty is complete because it is no longer about a “plan to arrive” (until the end of the year without an exchange crisis), but about how to manage such a lack of foreign currency without expectations collapsing and, with them, the worst forecasts taking flight.
Massa himself launched in the last few hours a call to bankers to try a way out of the drought of dollars and the accumulation of debt held by those institutions.
It will do the same with the leading food companies.
definitions are coming that the next economic times, always difficult, will hold for Argentina.
