By case, according to the survey carried out by the consulting firm Focus Market, mass consumption registered a drop of 7.3% year-on-year in August, to accumulate a contraction of 2.6 in the first eight months of the year. “In August, inflation slowed down, but it is still on the podium of the three highest figures for the year. The flip side is a weakened pocket in your purchasing power and a level of credit card debt that is an oxygen tank with less capacity to cushion a breather towards the arrival of the beginning of the following month. The adjustment that was not seen in the public sector is seen in the private sector, in families, especially in the middle class,” Damián Di Pace, director of the firm, described in this regard.
It is, after all, a fact that somehow graphs the reality that is perceived especially in the second half of 2022. It is that, as he explained to Ambit the Head of Research at Ecolatina Santiago Manoukian, “in the first half of the year, consumption continued to grow compared to last year.” “In the first place, led by services, by the sectors most affected during the pandemic,” he said. There was, he remarked, a fall in the demand for money, “a flight to consumption, accompanied by a recovery of real wages”.
Second semester
During the second half of the year, however, the reality is different. “The second semester began with perspectives that are tainted by, first of all, the restrictions on imports at the end of June. This limits the expansion of the supply in the domestic market, in terms of quantity and variety, in addition to generating additional inflationary pressures,” Manoukian said.
“But to that is added the greater impact of the inflationary acceleration on income that is expected for the coming months. Although the parity They can help the formal sector so that wages do not fall so much, if they reopen quickly, we believe that the impact will be greater than it was in the first part of the year,” said the analyst, who added: “And to that is added the adjustment in rates: which not only impacts the CPI, but also subtracts disposable income to spend on consumption. Families are going to find themselves with a higher fixed cost and all the rest that they have left to save or consume will be restricted”.
“The rise in consumer credit and investment, due to the rate adjustment that the Central Bank has been carrying out and that we hope will continue in September, will be another factor to consider. And there is a fiscal impulse that has to be less, a capacity that the State has to boost economic activity, which is going to be less than what it was in the first part of the year”, remarked Manoukian, who concluded: “There is a combination of factors that suggest that activity and consumption in particular are going to be affected.”
A heterogeneous reality
Beyond the fact that growth in consumption seems to have reached a ceiling, they also point out that it is a heterogeneous reality. “As the predominant component of GDP in Argentina, what happens to private consumption is going to determine the rate of slowdown in this last part of the year”, assured Sergio Chouza, director of the Sarandí consultancy, who in any case detailed: “For now, there are no unequivocal indicators that mark a collapse. There is some lateralization, there are wholesale consumption indicators that are beginning to give a month up, another down. Mindful of the fact that, in the months of greatest financial and exchange turmoil, families were preserved from making some non-essential consumption”.
“Secondly, there are sectors that have low availability, such as those for the consumption of durable goods linked to capital goods for the productive sector or final consumer goods for familiessuch as vehicles or household appliances. And, in some cases, there was some kind of supply rigidity in the most critical weeks where speculation prevailed, because there was no reference to stable prices in terms of replacement costs,” added Chouza.
The economist also maintained that although it is likely that this year there will be a drop in real wages, “there is still a very high nominality that generates heterogeneities”. “So, there are sectors that may have pesos available and in a context in which pesos burn in the pocket, the impulsive act of many families who may not have sophisticated instruments to preserve the value of savings, decide to consume. Therefore, in the remainder of the year I do not see that there will be a collapse. Yes, instead, a dynamic with its tribulations would be seen: a saw-tooth dynamic, with some months up and another down. And, for now, in the different indicators there is not a very evident pattern”, he concluded.
Source: Ambito
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