“In the fifth month of the year, consumption slows its fall compared to the level of April. The bonuses granted by the IFE, the adjustment to retirees and pensioners and the opening of parity, have allowed sales to increase in volume, but still with year-on-year falls. The acceleration of inflation is not being able to be compensated by the level of income of Argentines,” said Damián Di Pace, director of the firm.
In addition, it was highlighted that, in the accumulated figure for the year, the Metropolitan area persists with a drop in consumption at a double-digit rate (11%)while the Interior remains stable despite showing a retraction for the third consecutive month (-0.1%).
But, beyond the macroeconomic situation, the turbulence in the financial market may have a forward impact on consumption indicators. This was pointed out by Di Pace: “What is happening in the market in the last week does not favor the future scenario in terms of inflation and consumption in the domestic market. The increase in the fiscal deficit had as a response uncertainty on the part of the market, due to a greater need for indebtedness in local currency with the risk of future reprofiling. The move from inflation-adjusted bonds to parallel dollars always sets off alarm bells.”
“In addition, the Government will have to face a debt auction for more than $500,000 million at the end of the month, if it cannot place it in the local debt market, it will imply more monetary issuance with more future inflation and greater deterioration of the purchasing power of Argentines” , he added.
future scenario
In this sense, the analyst stressed that the purchasing power of consumers will be affected in the coming months. “Even more so families that depend on non-constant income as is the case of monotributistas, self-employed and informal. The correction of the regulated prices of the economy, such as electricity, water and gas rates, will generate a direct and indirect impact due to the increase in spending on families and the increase in gondola prices by industry and commerce, which will have to transfer the increase in their costs,” Di Pace stressed.
Another aspect highlighted in the report is that many families choose to pay by credit card in order to finance their expenses at the supermarket. “This behavior occurs above all in the wholesaler. Stocking at a total financial cost of 82% per year with the card, in many categories pays off by advancing the purchase of products that exceed 100% year-on-year in their price variation,” the analyst concluded.
Consumption slowdown
In this context, from the Sarandí consultancy they pointed out that “although the productive plan remains solid, a slowdown is beginning to be noticed in some indicators linked to consumption”. “For example, sales in retail stores registered the first drop in 15 months in May (-3.4%), while purchases in supermarkets also registered the first decrease in 10 months (-0.1%). raising the magnifying glass, VAT collection began to show a slowdown in growth in recent months. From double-digit real increases last year, it fell to an average of 3.5% in the first five months of 2022,” the firm noted in a report.
“This indicates that consumption is still delayed, and has room to grow as the process consolidates. These indicators are all closely associated with the evolution of family income: in the index accumulated since the end of 2019, there is a rise of 2.41% for average registered wages against inflation; there is a lot of dispersion between sectors of activity, given the high volatility and the difficulty of generating stable parity references; informal workers, linked mainly to service activities, show a greater delay than the rest”, they added from the consultancy.
Source: Ambito
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