The first measures of the government of Javier Milei in Argentina have their correlation in Uruguay: the price difference between the two countries decreased by 59.9% between November and January, making the price less attractive shopping tourism that characterized the flow at the border throughout 2023.
The latest report on border prices, prepared by economists María José Medin and Gimena Abreu of the UCU Salto Economic Observatory and to which he agreed Ambit, showed that the indicator is at 97.4%. This means that purchasing a basket of goods in Salto costs a Uruguayan 97.4% more expensive than doing so in the Argentine city of Concord.
According to the registry, which takes into account 60 products selected and purchased the monthly average of the local exchange rate with the Dolar blue Argentinian, Argentina It has become less cheap in all areas measured.
However, the greatest differences continue to be recorded in the segments with historically the greatest price gap: alcoholic beverages and tobacco 152%; meals outside the home 154% and household products 120%.
The food and non-alcoholic beverages category, which represents 49% of the Border Price Indicator, the decrease in the price difference was 35% between November and January, to stand at 93%. Even two products, rice and cooked ham, are purchased cheaper in Salto than in Concordia.
This is a notable fact since, since September 2021, the price difference for that division had exceeded the 100% threshold in each record.
In the household products category, which includes personal hygiene and cleaning goods, the gap fell 37%, although the differences are high (120% on average). The most significant price differences occur in powdered soap and detergent, reaching 214% and 165% respectively.
Why did the price gap with Argentina narrow?
The report from the UCU Salto Economic Observatory confirms with data a reality that began to become palpable in the coastal cities of the Uruguay.
On Monday, the mayor of Salto, Andres Limasaid that “it is no longer attractive to go to Argentinathere are no longer those kilometer-long queues of vehicles crossing from one side to the other,” and added that “there was a significant increase in the cost of food and groceries that make up the basic basket” in the neighboring country.
It is worth remembering that Javier Milei’s government devalued the Argentine peso as soon as he took office in December, bringing the official and blue exchange rates closer together, whose gap narrowed considerably. This Tuesday the official dollar is trading at 848 Argentine pesos and the blue is trading at 1,160 Argentine pesos.
Yet the Chamber of Commerce and Industries of Salto had established the improvement in sales in the order of 20% since the libertarian assumed power in Argentina.
During 2023 the situation was very different. The images of kilometer-long lines of vehicles crossing international bridges and ships Bus and Cologne Express with 100% occupancy during long weekends illustrated the enormous consumption diversion.
According to data from the consulting firm ExanteOf the 3% that Uruguayan consumption grew last year, almost half of that growth occurred in Argentina. This situation even affected the collection of the DGI with a decrease in what was obtained from taxes such as VAT and the Imesi to fuels.
The fuel case was paradigmatic. The state company Ancap made public its concern at the end of last year about the drop in activity at its service stations on the coast.
With the increase in fuel prices in Argentina – which until January had been 78%, but now is 30% with the modification of the fuel tax – only in the second half of December did sales at service stations in border cities recover by 30%.
Added to this is the 40% reduction measure of the Imesi decreed by the Uruguayan government. With it, the price difference in the liter of super gasoline was 66% in January versus 177.1% in November.
Source: Ambito
