Argentina: Sharp drop in mass consumption reported

Argentina: Sharp drop in mass consumption reported

Wholesale prices outpaced inflation in July

Private studies released Tuesday in Buenos Aires showed a 16.1% drop in mass consumption in the first week of August, which further aggravated July’s 15.8%, the Buenos Aires daily La Prensa reported.

This year’s contraction thus reached -6.1% with -5.6% in the provinces and -7.6% in the BA metropolitan area, according to a study by the consulting firm Focus Market based on figures provided by Scanntech (a code reader in 680 points of sale throughout the country that processes 3.5 million tickets per month).

“Consumption has been dragging fall in recent months. The month of August both the devaluation of the official wholesale exchange rate that in the first 11 days was running at a rate of 16% per month, the incorporation of taxes for the importation of goods and services, this week’s devaluation of 22% and the evolution of the dollar rate in the parallel is leading to strong price increases of up to 25%,” said Focus Market Director Damian Di Pace. He added that “prices in the economy are adjusting rapidly after the devaluation of the peso against the dollar during this week.”

“All product families are falling: Food, Personal Care, and Cleaning are the ones with the greatest decline in consumption in the accumulated 2023. [The] Beverages [item] is the one with the smallest drop,” he also noted.

Meanwhile, wholesale prices went up 7% in July for a 112.7% yoy increase, according to the National Institute of Statistics and Census (Indec). Wholesale prices thus outpaced in July the month’s 6.3% inflation.

The variation in the domestic wholesale price index (IPIM) is a consequence of the 7.0% increase in “Domestic products” and 7.7% in “Imported products”.

On the other hand, the general level of the Wholesale Basic Domestic Prices Index (IPIB) showed an increase of 6.7% in the same period. In this case, the variation is explained by the increase of 6.6% in “Domestic products” and 7.7% in “Imported products.”

Likewise, the general level of the Basic Producer Price Index (IPP) registered an increase of 6.4% in the same period, as a consequence of the increase of 5.6% in “Primary products” and 6.8% in “Manufactured products and electric energy”.

Indec reported last week that the Consumer Price Index (CPI-Cost of Living) rose 6.3% in July, 60.2% so far this year, and 113.4% in the last 12 months.