Uruguay witness how price gap with Argentina reached the new historical maximum of 180% —since 2015, the year in which the Salto Economic Observatory of the Catholic University of Uruguay (UCU) began to carry out the measurement—, encouraging more and more Uruguayans to cross the border in search of better prices for the products and services they consume daily. In this sense, what are the items with the greatest difference in values?
According to the last Border Price Indicator (IPF) prepared by the UCU, the item that presented the greatest difference was that of Miscellaneous Goods and Serviceswith a gap of 339%, a new record in a historically most expensive division in Uruguay what in Argentina. This section includes, for example, personal hygiene items, and among the cheapest for Uruguayans—due to exchange difference- There is deodorant, shampoo and toilet soap.
Another area that presented a wide gap (261%) was that of Alcoholic Beverages and Tobacco, with beer and cigarettes occupying the most convenient price positions in the neighboring country for visitors from this side of the pond; while Domestic productswith a difference of 218%, made laundry soaps and detergents cheaper for Uruguayans.
The Food and Non-Alcoholic Beveragesmeanwhile, are at least a 190% more expensive in Uruguay what in Argentina: powdered desserts, mayonnaise, soft drinks, noodles and salt were the products that can be obtained at the best relative price on the other side of the border, according to the last measurement in September. And, finally, fuels are also a star element in Uruguayan purchases in the neighboring country; especially, diesel.
To these values, however, we must add the recent escalation of the Dolar blue which further widened the price gap between both countries. In this context, it is expected that the number of Uruguayans who travel to the neighboring country in search of better consumption opportunities will be very important.
The diversion of domestic consumption, a concern
The Argentine present continues to generate direct consequences in Uruguay, through a exchange difference which is accentuated by the rapid devaluation experienced by the neighboring country. Consequently, the price gap continues to deepen and, in turn, the internal consumption is increasingly diverted to the other side of the border, affecting the employment and the tax collection of the State.
“Without a doubt, this strong acceleration in the rise of the blue dollar in Argentina, in some way, exacerbates, at least in the short term, this situation of exchange rate misalignment with the neighboring country and, therefore, of consumption leak to that country,” he said. Florencia Carriquiry, partner of Exante.
“The data we had until June had already set a record for departures of Uruguayans to Argentina, of almost two million trips in the year, of more than 660 million dollars spent there and that was only one semester; Therefore, far from slowing down, it must be exacerbating. “These figures have various impacts on the reality of consumption at the domestic level,” he added in dialogue with Ambit; and emphasized that the dynamism in consumption will have much less traction on local commercial activity than it usually had.
However, Carriquiry pointed out a fact that is also of great relevance that cannot be left aside when thinking about the exchange difference and, particularly, the price gap: the inflation. “It is true that this strong devaluation temporarily generates a further deterioration of our relative prices with Argentina, But we are already seeing in recent months that the devaluations of the dollar are being translated more and more quickly into inflation, and that means that in a matter of a few months the impact of the depreciation is also, in some way, offset by the accelerated rise in consumer prices in Argentina”, considered.
“This means that “in terms of our relative prices, the initial shock is seen more or less quickly, but then it returns to the initial point,” he added.
Source: Ambito
