1 of 1 Image of a grocery store in Buenos Aires, Argentina Photo: Agustin Marcarian/Portal Image of a grocery store in Buenos Aires, Argentina Photo: Agustin Marcarian/Portal
Uruguayans are crossing the border into Argentina to buy cheap food and fuel in their troubled neighbor, but the trend is leaving businesses near the border in trouble of their own.
Uruguayan supermarket manager Noelia Romero said sales fell quickly as her shoppers increasingly took day trips to Argentina in search of bargains.
“We’ve been hit hard on food and cleaning supplies,” Romero said. She works in the town of Fray Bentos, which is separated from the Argentine city of Gualeguaychu by the Uruguay River and easily reached by a bridge.
Argentina is struggling with over 100% inflation and a weak currency, the Argentine peso, which has lost about 25% of its value against the dollar this year, although tight capital controls have slowed its decline. In Uruguay, the annual inflation rate is 6% and the local currency has appreciated strongly against the dollar.
This ongoing economic crisis has created a dilemma for cities on Argentina’s borders with Bolivia, Chile and Uruguay, as they are unable to compete with Argentina’s prices, which are often just a short distance away.
“There in Uruguay fuel is seventy pesos (US$1.58) per liter and here in Argentina we pay twenty pesos (US$0.53) so it’s a lot better for us,” said Robert de Lima, who Gualeguaychu had traveled less than 45 kilometers from Uruguay.
High unemployment and bankruptcies were reported in border towns, forcing the Uruguayan government in May to introduce economic measures to protect traders, including some tax breaks and rebates on gasoline and medicines.
Uruguayan President Luis Lacalle Pou has acknowledged there is a problem with Argentina’s low prices and has asked regional governors to have his government introduce a temporary import tax on foreign goods crossing the border.
Abelardo Alzaibar, who owns a pharmacy in Fray Bentos, said the price disparity is creating “enormous” problems for local businesses to survive, despite incentives.
“There are store closures, there are stores in debt and obviously no signs that this is going to end any time soon,” he added.