About, Alberto Cavallo, professor at Harvard University and son of the former Minister of Economy, analyzed the behavior of local prices compared to American prices by comparing three major items: food, gasoline and electronic products.
Basket in the US vs Argentina: almost the same prices
The contrast of the basket composed of these items in both countries showed that currently Prices are practically the same as expensive in Argentina and the United States at the official exchange rate and only slightly lower in US territory than the parallel exchange rate.
When presenting this situation, Cavallo specified that parity was reached in recent weeks since “just three months ago, after the last major devaluation of the peso, the same basket cost only 60% of the cost in dollars in the United States.
Despite the almost uniform behavior of prices between one country and another at a general level, the economist clarified that “there are important differences between categories” and pointed out that “for example, automobile fuels now cost approximately the same in Argentina and the United States at the official exchange rate”, while “food is still cheaper in Argentina (about 75% of the cost in the United States), as can be expected from a food exporting country.
While “at the other end, Electronic products are 80% more expensive in Argentina than in the United States”, although he revealed that “this is significantly less than in December, when they were almost 3 times more expensive at the official exchange rate”, which reinforces the general trend of cost matching.
In this way, it is observed that while gasoline has a practically identical cost, Food is 75% cheaper in Argentina and electronic products count 80% less in the United States.
Is there inflation in dollars?
This shows that prices in dollars They don’t have a big gape at a general level but they do differ according to the categorization based on the characteristics exporters and importers of each country, which also usually happens in conditions of macroeconomic stability and with the economy open to trade without many distortions.
Cavallo explained that “these PPP indices are constructed by comparing the unit price of thousands of carefully matched tradable goods (food, fuel and electronics) and are aggregated using official CPI category weights.”
Source: Ambito
