10 smart strategies to deal with rising prices in homes and businesses – 2024-07-12 11:27:37

For months now, Sellers and buyers They have equally expressed their Concern over rising prices of products that make up the Basic Food Basket (CBA)especially fruits, vegetables, groceries and others.

Why does the price of products change every month? Werner Salguero, director of Indexes and Continuous Statistics of the National Institute of Statistics (INE), indicated that the main reasons are seasonality and cultural aspects, but the main thing is the demand and supply of goods and services, Considering that scarcity causes price increases, while abundance causes the opposite.

According to INE figures, Monthly inflation in June 2024 was 0.96% or 0.16% more than in May, when it was 0.80% and the fact that last month this increase was recorded, in interannual terms, (the same month, but last year), The result is a healthy indicator that does not cause a strong blow to the economy.

In any case, The INE shared the list of products that had price increases and decreases: tomatoes, potatoes, chicken meat, avocados and cabbage became more expensive; while Gasoline, onions, chicken eggs and lemons all saw a drop in price.

But consumers express their discontent with the increases because even It has been proven that supermarkets are offering better prices than cantonal markets. To cite an example, these days, The price of an avocado in a market or store has fluctuated between Q10 and Q12 while in a supermarket it costs from Q5 to Q6.

Julio Rivas, Chairman of the Board of Directors of United Markets, He says that marketplace sellers are simply selling at a reasonable profit margin. He adds that the difference between them and businesses is possibly due to the purchasing model: “Large companies hoard and buy in bulk, thus managing to sell at lower prices.”

Cost of living versus income

Actually, The concern is not so much regarding the increase in prices but regarding the fact that family incomes are not rising at the same rate. and as an example, the amount of Minimum wage is completely insufficient to support the inflationary rate (it should be double or more to cover the cost of what is known as the expanded basket for a family), even buying in neighborhood stores.

For example, The minimum wage approved for 2024 in the department of Guatemala is Q3,634.59 (for non-agricultural activities, including a bonus of Q250). And according to what was published by the INE, The value of the urban CBA in June was Q866.97 per personwhile the Expanded Urban Basket (CAU) totaled Q2,098.92also per person.

According to the INE, An average urban family consists of 4 members. That means that, In June, a household needed Q3,467.88 to cover only the purchase of basic foodstuffs. Nevertheless, Other essential services included in the Extended Basket cannot be eliminated (housing, transportation, health, clothing, to name a few areas), apart from that, In many cases, only one member of the family works.

Considering all the above, An urban family of 4 members requires at least 8,395 quetzales with 68 cents to cover basic needs.so the The result is a deficit of Q4,761.18 each month.

Besides, For this example, the average minimum wage of a Guatemalan and capital city worker was taken as a basis, who earns Q110.97 per day. Nevertheless, In the rest of the country the salary scale is between Q95.85 and Q105.83 daily.. This is without taking into account that some employers offer working conditions that are below that.

Savings tips for families

The truth is that the Parents should look for alternativeswhile the authorities find the balance point or give a solution to the problem, in case you are looking for it:

1. Keep calm: Problems are best faced with a positive attitude. There are many tips, but the important thing is to see how the family finances support each other.
2. Create a family budget: Considering all income and expenses allows you to keep in mind which expenses are essential for the family and which purchases can be reduced, postponed or even eliminated.
3. Make a shopping list: If possible, compare prices and choose cheaper brands without sacrificing quality. Be careful with offers, which can be misleading.
4. Avoid “small expenses”: Many times we think that “a treat” will not affect the monthly budget. The problem is that throughout the month there can be “many small expenses” and the sum of these amounts to a significant amount.
5. Cultivate the habit of saving: Success does not depend on the amount you will set aside, but on consistency and willpower – to save and keep it in reserve. If you save Q50 per month in a year you would have a “cushion” of Q600 to use in times of crisis.
6. Apply the 50-30-20 technique: If both parents work in the home, allocate 50% of the salary to essential expenses, 30% to leisure and recreation, and 20% to savings.

The case of companies

The Consumer Products Industry Outlook 2024 studyof the international firm Deloitte, He stressed that when consumers are no longer willing to pay moreprefer to change brands to one that offers more affordable prices.

That same study highlighted that in view of the above, company executives are already thinking twice regarding the decision to raise the price of their products, because 46% of consumers do not have the purchasing power to pay higher prices and 36% are not willing to pay more for the same thing.

Besides, Consumers are looking for new ways to satisfy their needs. To cite an example, they are more selective when choosing a product as simple as a pizza: today they analyze whether it is cheaper to buy it in the supermarket aisle or in a restaurant.

Due to these changes in consumer habits plus inflation, not only in Guatemala but worldwide, it is necessary that managers to think strategically and choose to adopt alternatives based on innovation.

Four strategies that chains worldwide have already adopted and are having success are the following:

1. Expand production capacity in order to maintain high volumes and spread costs.
2. Changing the price-packaging architecture to meet consumer needs, occasions and value points, while improving profit margins. This is a widely used strategy in the food and beverage sector.
3. Applying the “circular economy”, a model that encourages the reuse, recycling, reconditioning or repair of goods. There are already brands that manufacture part of their products with recycled material.
4. Continuously review and transform the product catalogue, discarding those that are underperforming. This will help free up production lines and focus on those that are in greater demand.

So, Knowing the meaning of inflation and its consequences on the economy will help define clear financial objectives for decision-making. and make investments that generate profits.