The acceleration of inflation in August prevented consumption from improving and it remains at negative levels. The increase in tariffs is a cause for concern for household consumption.
In August, the consumption Household consumption of goods and services fell by 1.8% in August, representing a 7.8% drop in the year-on-year comparison. The data comes from the Consumption Indicator of the Argentine Chamber of Commerce and Services (CAC).
A slight acceleration of inflation during the month of August negatively affected consumption. While the continuation of the “crawling peg” indicates that inflation could relatively stabilize in 2024, the increase in public transport and water fares for September could accelerate it again. In this scenario, The evolution of the exchange rate will be decisive and utility rates to establish the net impact that inflation will have on real household income and, therefore, on the level of consumption they can achieve.
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This indicator developed by the CAC reflects the evolution of household consumption of final goods and services on a monthly basis, expanding and complementing the information contributions that the Chamber makes to the monitoring of trade and economic activity. In this way, the IC accumulates in the first eight months of the year a decrease in 6.4% ai, in line with the deterioration in consumption experienced in recent months.
This occurs in a economic scenario where inflation accelerated slightly, marking a rate higher than in the previous month. In August 2024, the monthly rate was 4.2%, with an interannual rate of 236.7% and an annual cumulative rate of 94.8%.
Consumption: how each sector performed
When analyzing the performance of some particular sectors, the CAC observed a general dynamic of year-on-year decrease compared to the values of August 2023, with the exception of housing, rents and public services..
The heading of clothing and footwear showed in the eighth month of the year a estimated decrease of 17% iawith a negative contribution of 1% to the 7.8% year-on-year decline in the CI. The sector remains depressed and sales have contracted sharply due to the fall in real household income.
On the other hand, the chapter of transport and vehicles showed a estimated decrease of 13.8% ia. in August, contributing negatively by 1.7% to the year-on-year variation of the IC. The slight contraction in the registration of cars for consumption and the slight increase in the price of gasoline explained the behavior of the index.
Recreation and culture showed a decrease of 21.7% year-on-year in August (with a negative contribution of 1.6 pp to the IC). The dynamics of consumption in recreation and culture are as expected: with real income at low levels, leisure consumption has been postponed.
Regarding the section of Housing, rents and utilitiesthis showed a neutral dynamic with a variation of 0% ia in August of this year. Although household disposable income fell, demand for electricity experienced an interannual increase that kept consumption in this area constant.
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Source: Ambito
