He consumption started the year with some signs negatives, as reflected in various private and sectoral surveys. AND the prospects for the near future are not very encouragingaccording to the analysts’ view: it is that they point out that the acceleration inflationary and less availability of credit may jeopardize the recovery of domestic demand.
By case, according to the survey carried out by the CAME, SME retail sales fell 0.9% in February compared to the same month last year, to accumulate a decrease of 0.6% in the first two months. In the monthly comparison, businesses sold 0.6% less than in January.
“Sales for the month were mainly concentrated in goods and services related to the tourism sector. In addition, in February there was a strong increase in Food prices with its maximum exponent in the dynamics of beef, with monthly increases that averaged 25%, which reduced the purchasing power for other products,” they explained from the entity.
Fairly, mass consumption also fell in February. According to the survey by the consulting firm Scentia, it presented a year-on-year drop of 1.1%, accumulating a negative record of 1.4% in the first two months of the year.
Once again, in this sector, the gap between the different sales channels was evident: “Supermarkets maintain their positive trend, +8.3% this month, while Supermarkets contracted -8.9%, maintaining the trend of several months in this part.”
“The explanation for this phenomenon continues to be in the bases of comparison and the accentuated difference in prices, to a large extent. The acquisition of shoppers by the Supermarkets channel, coming from other channels, also gives more clarity to this context”, they analyzed from the firm.
In this sense, the latest official data showed growth in sales in large supermarket chains and wholesale self-services: according to INDEC, in January, sales in supermarkets grew 5.3% monthly and 0.8% year-on-year; in wholesalers, they climbed 0.1% monthly and 2% year-on-year.
What is expected in the future
The projections about what may happen in the coming months in terms of consumption are not very encouraging. “What we see is that we are on the way to a spending formula that will indeed suffer: the income of Argentines with respect to the acceleration of inflation is going to deteriorate, but there is also a low level of savings, and the level of debt is already high, with very little liquidity on the part of the banks to lend or raise the credit card limits above inflation, when they are financing the Government through bills and bonds,” Damián Di Pace, director of the Focus Market consultancy, told Ámbito.
“Then, the search for containment of the macro implies that the banks lend to the State, and the other side in the micro is that there is less level of accessible credit to compensate for this drop in income and available savings. With which, there will be a drop in consumer spending this year”, remarked the analyst, who added: “On the other hand, the deterioration of the economy is going to generate that, after having seen a growth in private employment, there will again be a fall in this aspect, perhaps with a higher level of growth of informality, so there will be income well below the price variation of the economy and this spring will deteriorate consumption in the domestic market”.
In this sense, Di Pace pointed out that he foresees a drop in the level of activity of around 2% for this year, with a retraction in consumption “in the order of 3%”.
For his part, Aldo Abram, director of the Libertad y Progreso Foundation, highlighted: “What is relevant will be the demand that there will be for producers in the country. And there we have a series of problems. In the first place, income, because since there is no level of exports like the ones we had last year, it represents a reduction in income for all Argentines. That is We are going to have to lower our spending compared to last year”.
“On the other hand, it’s see how much international financing we are going to have. This year, international organizations are supposed to give us fewer resources than those that expire. The third point that will help prevent this year from being a good one is clearly the issue of uncertainty: the perception of risk regarding Argentina is increasing and in this context, what people do is save more and invest less. And all that, they put it in foreign currency, definancing our economy. And that obviously removes internal demand. For this reason, the forward trend will also be towards a drop in the level of activity”Abram remarked.
other factors
For its part, a few days ago the consultancy Ecolatina produced a report in which they analyzed different factors that could help sustain private consumption in the coming months. “The recent inflationary acceleration shows that the ex-post real interest rate returned to being negative in the short term, even with this week’s rise. Likewise, the dollar in its free version is not only ‘expensive’ in historical terms, but also represents a significant outlay for a median salary. As a result, an ‘easy’ way out of the devalued pesos will continue to be to allocate them to the consumption of goods and services”, they analyzed from the firm.
“Likewise, considering that services are consumed more intensely by higher-income sectors -those benefiting from parity- and that they are branches that may not be so affected -a priori- by import restrictions, their importance -around 60 % of the economy- could prop up domestic demand in a year in which good news will not stand out,” they concluded.
Source: Ambito
