A woman consults meat prices in a supermarket in Buenos Aires this month.STRINGER (AFP)
Argentina started 2023 with accelerating inflation. The Consumer Price Index (CPI) rose 6% in January, up 09% from December, leaving annual inflation at 98.8%. The inflationary escalation complicates an election year for the ruling Peronism, in which it has not yet defined its candidate and in which it is aiming to bring monthly inflation down to 3% in the first four months of the year. The government is particularly concerned about the 6.8% rise in food prices over the past month. At the end of January, the Ministry of Economic Affairs extended its maximum price agreement until June. This Monday, in an attempt to anticipate action against the negative numbers, he also announced an agreement to fix meat prices: supermarkets will sell selected cuts at a 30% discount until the end of March.
Food prices have skyrocketed since late 2022. The November and December indices were taking a breather after months of climbing above the CPI average. Food has since risen again: from 3.5% in November to 4.7% in December and to 6.8% this January, again beating the CPI average. The other significant increases in the first month of the year are in the area of leisure activities, 9% coinciding with the holiday season in the country, and an 8% increase in tariffs for public services such as water, electricity or fuel. The rise in inflation in January was above forecasts by the central bank, which surveys private companies and consultants every month. The forecast they had for January was 5.6%.
The year starts uphill. The government must maintain workers’ purchasing power ahead of October’s presidential election, while delivering on a promised International Monetary Fund adjustment to bring the budget deficit down to 1.9% by 2023. The measures imposed since August last year began to bear fruit: the government managed to keep its fiscal red at 2.4% of GDP in 2022, below the 2.5% imposed by the IMF, with an increase in rates for public services, removing energy subsidies and imposing restrictions on access to dollars for imports.
Now the government is focused on making sure inflation doesn’t pulverize wages. In late January, the Commerce Ministry renewed its agreement with various sectors to control the price of up to 2,000 essential products, which will maintain a monthly increase of 3.2% through June. This Monday, they announced that meat would be included in the Fair Prices program, which the government hopes will use to keep price hikes on food and other basic services in check.
Economy Minister Sergio Massa announced Monday that supermarkets will sell seven cuts of meat at discounts of up to 30%. After a period of drought that affected livestock production, the government subsidized up to 40% of feed for animals raised on fattening farms. With this measure, the Economy Ministry hopes to speed up production and increase supply by at least 18,000 tons of meat, about 25% of Argentina’s average monthly consumption of 60,000 tons.
The big problem, as with controlled prices for the rest of the base basket, will be verifying compliance in small neighborhood shops. The government cannot impose on butchers the prices it has committed to for large producers who supply supermarket chains, which is why it has announced discounts for shoppers who use their debit cards in these shops: 35% for Banco Nación users who make their purchases transact on weekends and a 10% refund for users of other banks as long as their purchases do not exceed 20,000 pesos, about $100 at the official exchange rate.
The measure comes into effect this Friday, so its impact on the CPI indices will not be reflected until after the March records. Butchers doubt it will be easily enforced. “On Friday the customer must have the Banco Nación card and the butcher must be at Banco Nación. And there are many that are or receive postnet [las terminales de pago] for major debit cards. I don’t think the program is that fast,” Butcher Shop President Alberto Williams said in a radio interview on Monday.
“Postnet hasn’t worked for me for a month and I have to request it again,” says a reluctant butcher from downtown Buenos Aires’ Once neighborhood. “For us, keeping up the expectation is a quilombo. I slash prices as much as I can, but refunding a ticket purchase takes about four days, and I can’t get deliveries without that money. If you just ask me, I prefer to collect and sell the same for cash that I can. The diagnosis aligns with at least three other butchers surveyed in the city this Tuesday: The smallest establishments don’t have the supplies for the big supermarkets, they are losing customers to them and, despite the government offering them tax deferrals, the money in cash rules stronger.
A kilo of roast, one of the cuts offered by the government in its frozen price list, costs about 1,100 pesos in the Once district, about $6 at the official exchange rate. The review says the kilo will cost 1,035 by March 31, and in Argentina, where cash is still sent daily, the largest ticket will not be enough to buy it.
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