Regarding inflation, the beginning of May was the worst so far this year. The consultancies that usually monitor the evolution of prices suggest that this month’s CPI would exceed the record for April, which reached 8.4%.
Las latest government measures, known last weekend, do not directly attack inflationary dynamics. Rather, the package tries to put a limit to exchange rate overheatingsomething that is not clear that it will be successful.
The blue dollar ended yesterday at $488 and has already accumulated a rise of $14 in the first two business days of the week.
The good news is that the Central Bank has been buying dollars for eight consecutive rounds, although well below the expected performance for “soybean 3”. In that period, he added purchases for just US$225 million.
With an exchange gap that threatens to widen again and inflation with the risk of spiraling, companies and also consumers try to hedge against possible disruptive scenarios. Each one in their own range of possibilities, but absolutely all operating on the defensive in case, indeed, what comes in economic terms is worse.
Free stone behind the gondolas
With inflation close to 9% per month, and with the food item a couple of points above, stocking became a safe bet. Even more profitable than fixed terms, even with the latest interest rate adjustment.
The stocking of products, a practice that extends throughout the commercial chain.
Some leading companies already send price lists twice a month. There are even cases of three lists, all with increases. It happened in the dairy sector and also in some cookies.
Typical products of the basic basketsuch as rice and grass, show increases close to the 30% monthly. One of the main food companies in the country decided to suspend rice sales in the last few hours. This product is one of the most impacted by the drought, and its production fell by 30%.
Dairy products also became a problematic item, with sharp rises in prices and shortages of different items. Also due to the drought, some of the large companies decided to turn to manufacturing products that give greater profitability to the detriment of fluid milks.
Business coverage does not end there. It is a wave with different vertices, each one according to the size of the company and the sector where it belongs.
The coverage of the companies
In a kind of tug-of-war -everyone against everyone-, companies try to preserve your capital. That is its main objective in a scenario of great uncertainty like the current one.
All the members of the consumption chain -production, distribution, shops and consumers- go after the stock of merchandise. From manufacturing companies, which place orders for raw materials, to supermarkets and wholesalers, and even families who have space in their homes, prioritize purchases before a new price list makes the product more expensive.
The shortage, a problem that the Government wants to avoid by all means.
Each member of this chain, in turn, responds according to their own needs. If you prioritize having money in any circumstance or if, in turn, you get a discount or a good price when you turn around and advance the pesos to your supplier.
In this context, moreover, financial terms have been shortened. Promotions were also reduced, both for retail customers and for supplier companies and the large supermarkets themselves.
Payment terms were significantly reduced. Depending on the products -and not to mention the imported ones-, payments are made in the very short term. A company that until before the inflationary acceleration had 45 days to pay, now requires no more than seven.
If it cannot (or the executive does not accept the condition), then the merchandise goes to another destination. Or it stays in the shed of the manufacturing company waiting for a new call.
End of promotions
In these circumstances, medium-sized and smaller companies work with the slogan of “take care of the customer“, even when financially it is not the most convenient. Although the businessman always prioritizes not losing capital, he also recognizes that he will need the client when the turbulence is over and the economy returns to a certain normality.
It is different the case of the chains of supermarketswith whom the manufacturers maintain a strong dispute.
The industries took benefits from the supermarkets, which, in turn, also reduced commercial actions to a minimum. Except for the most profitable products -or those that want to get out of stock before a close expiration-, the large chains significantly reduced promotions for their customers.
The Government, in this context, focused on ensure supply. Massa officials believe that if the shortage of basic merchandise is added to the inflationary escalation, the bad mood of consumers would be exacerbated.
They do not lack reason. That does not mean that an anti-inflationary policy can at least be hinted at, which for now is nowhere to be found.
