Between the sensation and the pocket, is the inflation

Living in Argentina is one of the most beautiful things you can experience, whoever does not live on this earth will never understand it. Perhaps for this reason, there are many times when we hear that from abroad they question how it is that we are so passionate about living here, even more so when they find out about situations that we are normalizing on a daily basis.

Our days almost unfold in a dizzying way and similar to the following: we wake up, we move, we work, we train, we raise children, we are productive, we make purchases, we fulfill our daily commitments and those of us who can try to give ourselves our time. So far a story common to many families, but we know that behind it we have a concern that haunts us, when it is not enough, and even immobilizes us: inflation.

We all have an idea formed about what is the evil that afflicts us, providing an answer to that question that resonates with us: what happens to us that we cannot find the economic direction?

We agree that inflation is, exists and is tangible. What is also true is that we are presented with two inflations, one on each side. One is that of the media, that of eloquent and macroeconomic analyses, that of explanations that come from abroad, that of adjustment and the urgent need to shrink the State; on the other side is the one for every day, the one for the pocket, the one for local businesses, the one for bread, meat and milk.

It is that, if inflation appears to us as a phenomenon difficult to solve, then it must also be difficult to understand.

I bring a proposal to review and approach the matter, so that we can discuss the weight and the increases, looking a little further.

A first problem that I notice is the impact of the excessive increase in the nominal value of the products. This is the shock, the fright and at times the anguish and indignation that the new value of what we recently bought at a lower price generates in us. Here I am interested in thinking that after this shock, we try to understand that if this increase is in step with parity, that is, with the increase in wages, there is no problem. If something is worth $100 and my income is $1,000, and that same thing becomes worth $200 and my income doubles in the same way, reaching $2,000, we see a proportionality between one and the other. With which, and to the extent that at the new price you can continue buying the same as before, there would be no major problem. Although we know that in these times things are not like that and we are losing.

A second problem is the loss of purchasing power for the salaried classes. In other words, this loss of real capacity is made up of inflation on consumer products and services plus a series of parities in which the negotiations have not even managed to compensate for these increases. We’re not talking about winning, but it’s not even enough for a draw. The serious thing is that it occurs especially on the products of the basic food basket and that this has a particular impact on low-income families who are the ones who allocate most of their income to the acquisition of food.

The most affected

Let’s imagine that although inflation is a general average, it is not the same impact on salaried middle-class families in peripheral areas, as it is on upper-class families in large cities. For the former, the most sensitive increases will be those related to food (which have reached the highest rates of increase) and basic services of water, electricity and gas, and transportation; against the latter that will surely be affected by increases in prepaid medicines, building expenses, connectivity services and cable television, municipal taxes and fees, fuel, insurance and patent.

I am not referring to owners of large national or transnational companies, those that have accounts in foreign currencies abroad and are listed on the stock market, nor are I referring to those who have had the good fortune to inherit large fortunes and/or with their last names it is enough , even less I am thinking of those who live in super private neighborhoods with up to three private house employees plus their own with a bed inside. I am thinking of salaried middle-class people, educated and/or in training, including first or second university generation, with children, with their own home with a mortgage loan and/or renting, who with their income cover their monthly expenses and depend on the next income to continue their plans, that is, I mean the vast majority of the population.

Today those stories of parents and grandparents who changed the car with the bonus are left behind, of those who with their salaries could buy land and with their own hands build their house to live in as a family as a life project, of those who with their own effort set up their company scaling on a regional scale; currently owning a car, buying or building a house is prohibitively expensive for a large proportion of the population.

Obviously these are complex times, and if we can affirm that soccer is the great national passion, then inflation is the great scourge. Everything would be aggravated by continuing in this lane and letting things happen. Because it seems that they always do it to the detriment of the vast majority, because let’s not be fools, if there is inflation it is because there are price makers. Those same ones that I am referring to, those same ones that generate new prices and/or raise the existing ones, are the ones who are affected the least.

If the State is not present with effective controls, with a firm hand and commitments that it can and must fulfill, working side by side and with the citizenry so that we are all active components in what we need to come, we will clearly be the losers. Because if the State does not intervene, and if we do not wake up so that some things change, the ones who win will be the same as always: it will be them.

*Member of the Observatory of Public and Social Policies of Río Negro.