2023-09-22 10:35:38
The Argentine economy continues the evolution of a suffocating inflationary rhythm. With figures that reach historical records in years and exorbitant increases in foods considered basic within the country’s food basket. The official measurements published by the INDEC on the Consumer’s price index (CPI), they are trying to bring some calm, with an “explanation” or weekly analysis of the inflation records, as announced by the Secretary of Economic Policy, Gabriel Rubinstein.
However the inflation in Argentina maintains its accelerated upward trend and, according to specialist estimates, they are the foods the products that are located as one of the items that puts the greatest pressure on the CPI data. In this context, private consultants do not project a quick reversal in the upward trend of the basic basket, so both meat and fruits and vegetables will remain at the top of the increases.
So far this year, official records did not stop growing: January reached 6.0%; February, 6.6%; March, 7.7%; April, 8.4%, May, 7.8%, June 6%; July, 6.3% and August, 12.4%.
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New inflation record in 32 years
A few days have passed since the publication of the official inflation data for August and according to the data released by the Indec, the registration for the eighth month of the year reached 12.4%, a figure that represented a new maximum record in the measurements of the last 32 years. In turn, the data that was published indicates an accumulated variation so far this year of 80.2%, while inflation accumulated year-on-year recorded 124.4%always according to official data from the organization.
However, the scenario is not favorable for the future: private measurements already project an escalation in inflation for the following months. According to the studies carried out, they estimate at least a 140% increase during the remainder of 2023. Some estimates even already reach figures of around 190%.
The Top Five foods in August
The month of August ended with very marked increases in certain areas: the division that registered the biggest increase was Food and non-alcoholic beverages, with 15.6%. This is due to the impact and incidence of the increases in Meats (24.6%), also in Vegetables and legumes (18.3%). They were followed by: Health with 15.3%, due to the increase in medications, and Home equipment and maintenance with 14.1%.
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According to Indec records, the five foods that had the strongest rise within the “Meats” category, placing itself at the top of the ranking of the 5: the common chopped with a price of $1,702.55 per kilo, which represented an increase of 39.4%. In second place was the Paleta, with a price of $2,487.86 per kilo, which translates into an increase of 34.1%. Third place was occupied by the “cuadril” cut of meat, with a price of $3,014.67 per kilo, with a 33.3% increase.
The Top Five of the meat cuts with the highest increase in August was completed with fourth place for the “buttock” with a sale price of $3,204.08 per kilo, and an increase of 32.8%. In fifth place is the roast at $2,470.95 per kilo and an increase of 32.4%.
For your part “Fruits and vegetables” also registered strong increases: tomatoes reached a rise of 31.8%, potatoes 28.3% and oranges 13.8% from July to August.
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Sustained upward trend
Spring will arrive with the upward trend in food prices that will remain sustained until the end of the year. In this framework, according to private surveys, prices have not moderated, closing the first half of September with an increase of 2.5%. Specifically for the rest of 2023, the Eco Go consulting estimates that inflation will continue to increase, with a projection of the increase in food that in September will reach 13.5% and a record of 13.1% in the general index.
-Eco Go Consulting: the consultancy estimated with respect to meat, that the price “tended to stabilize following the sharp rise it experienced in recent weeks following the devaluation,” although “in the second week of September, beef registered a rise of 2.6%, driven by the increase in semi-prepared (3.1%).” In parallel, chicken had an increase of 4.4% due to fresh and frozen chicken (4.4%). “Thus, as a whole, the category registered an increase of 2.8%,” said Eco Go.
Regarding the fruits and vegetables category, an increase of 2% was recorded. “Despite the drop in the price of citrus fruits (-2.5%), the rise in other fruits (3.1%) and apples (2.7%) more than compensated for the decline. Vegetables, for their part, showed an increase of 3.1%, with potatoes standing out (6.8%), which has already been rising for several weeks,” highlighted the consultant.
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Why food prices are rising
The head of the consulting firm Focus Market, Damian Di Pace, estimates that “In the case of fruits and vegetables, the composition of cargo transportation has a lot of impact. According to a report from the First Automotive Freight Transport Business Association, this cost has been rising 148% year-on-year. In August, due to the increase in fuel and the increase in diesel, it was in the order of 18% and for September a 21% increase in the cost of transportation is expected,” he noted.
He also added: “This cost is flying in Argentina and it precisely impacts fruits and vegetables, in addition to the seasonal issue because the drought hit planting and harvesting hard in many fields.”
Regarding meat, he highlighted that the price “was delayed and, indeed, we are seeing an increase in the product due to that delay. Although it might be at historical value levels there, it is only now being recomposed.” On the other hand, he pointed out that “Argentines try to advance their purchases before the peso loses purchasing power. And there is also a drop in production, which accelerates the variation in prices because there is more currency than product.”
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October post-presidential effect
From the consulting firm Focus Market, its owner Damián Di Pace, points out that the strategy implemented by the Government “might generate an additional increase in the price variation in the months of October, November and December 2023.” In fact it might be the impact of recent measures such as the expansion of credit and improvements in the income of retirees and beneficiaries of social planswhich would only have a temporary effect on slowing inflation.
“They are expansive measures that will end in an attempt to advance spending,” said Di Pace. The private sector projects that 2023 will close with a strong increase in food prices, mainly in the meat, vegetables and fruits divisions, he noted. In the same sense, from Eco Go, they warn that “it is very likely that following the electoral process, the distortions accumulated by the programs will be strongly corrected, particularly if the Government does not achieve their continuity, increasing pressure on prices.”
JL
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