2023-06-14 17:27:00
Despite the government’s efforts to make the Fair Prices program work, inflation continues to rise, the effectiveness of the different marketing channels was uneven, and there are even those who claim that it ended up affecting the most vulnerable sectors.
With an inflation that the private estimates in more than 8% for May, it is difficult to think that a basket of 2,000 mass consumption products with a monthly guideline of 3.8% is acting as an anchor, and even more, if there are breaches by the companies that participate in the agreement, as the Government has been assuring.
In the lasto Fair Prices report for the month of May, who make the technical teams of the Ministry of Commerceit was detected that in the supermarket chains visited there was a 70% compliance in product stock and 70% in signage.
Million-dollar fines for 4 large consumer goods companies
In addition, although the report details that andIn supermarkets, price compliance was 100%Portfolio sources told PROFILE that some companies transferred increases above what was agreed to for small sales areas. “There were price deviations”they assured.
In this sense, Commerce fined Danone for $45 million in early May and another to Coca Cola for $40 millionafter verifying that they marketed their products with increases higher than those agreed.
Price disparity between supermarkets and local businesses
To this is added the disparity between increases in supermarkets and local businesses.
This differential can be observed mainly in food.
According to a survey by Ecolatina, while rice increased 20.6% in supermarkets between January and Mayin the traditional channel or small stores did so in 57.6%.
for your part, andThe increase in dry noodles was 28.4% and 58.1%,
- in milk of 29.8% and 38.5%,
- in the water of 26.5% and 47.7%,
- in sugar 23.2% and 49.7%, among others.
The EcoGo economist and analyst, Rocío Bisang, explained to PERFIL that “The increase that companies cannot apply on the supermarket side is offset by increasing in nearby businesseswhich also manage a lower volume and less negotiation capacity”.
Fair Neighborhood Prices are already in force: what items are included and where can you consult the prices
little fair
On the other hand, a report by Ecolatina explained that “this gap between the increases in mass consumption products included in Fair Prices that are sold in supermarkets and those that are obtained in nearby storeswent or small self-services implies a more severe impact on the most vulnerable sectors”.
“Los poorer deciles of society not only spend a higher percentage of their income on mass consumption products, but tend to use large surfaces less: according to the latest Household Expenditure Survey households in the lowest 10% income allocate only 15% of their food and beverage spending to the modern channel, while that percentage grows to 45% in households in the highest 10% income”he pointed.
In this context, the price agreement program seems to end up affecting the sectors that need it most.
This is also becauseWithin the basket of the poorest 40% of households, food represents an average of 32% of consumption, while for the other 60% of families with higher incomes, this item explains 21% of the expense”, indicated Ecolatina.
It is worth noting that mWhile the General Level of the CPI climbed 32% in the first four months of the yearfood and beverages increased by more than 41% (+9 percentage points).
This category explained almost half of the inflation of the poorest households (48.3%) so far this year, while for the richest sectors the incidence was 20.4%.
Meanwhile, and before the INDEC releases the data for May, the consultant estimated that inflation in the food and beverages category grew 7,2% in the fifth month of the year.
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The patch solution
Faced with this problem, the Government launched Fair Neighborhood Prices, a new basket of more than 100 mass consumption products, what They are sold in neighborhood stores and supermarkets.
Retailers can purchase this basket at wholesale supermarkets (Maxiconsumo, Diarco, Yaguar, Vital, Parodi, Makro, Micropack and Nini) and suppliers to offer it to consumers at suggested prices.
The prices of the basket of products remain fixed until July 15, when they will have an update of 3.8%.
In Fair Neighborhood Prices there are also shortages
Regarding this new measure, Fernando Savore, President of the Federation of Storekeepers of the province of Buenos Aires (FABA), assured: “Fifty days ago I sent a message to the secretary of commerce expressing my concern about the difference between hypermarkets and local businesses in the prices of sunflower oil because we were paying exactly double”.
“This is how the idea of putting together a basket arises, in principle, of 40 products. The secretary asked me to put together a tentative list of the products that should be there. Then I found out that the basket was going to be 110”, he added.
“On the other hand, I emphasized that these programs always end up failing due to lack of supply and that we need the wholesalers to have the merchandise so that we can buy it and we can put it in our gondolas”, he affirmed.
The look of the specialists
For his part, the Chief Economist of the consultancy EcolatinaSantiago Manoukianexplained to PROFILE that “with Fair Neighborhood Prices trying to point to the main weakness of Fair Prices what is that andhe program is concentrated in supermarkets and hypermarkets, where the richest population consumes to a greater extent. But the poorest do it in small supermarkets”.
In that sense, in addition to the ineffectiveness that the program has had, was mostly in large stores. Thus has had a regressive impact, benefiting those who have the most”, he added.
“We believe that make a limited product offer, and with little impact on fresh products such as meat, dairy, fruits and vegetables It will be one more patch to stop the deterioration in the socioeconomic conditions that the poorest population is having, with inflation that has deepened its regressivity in the first part of the year ”, considered the economist regarding the new basket.
“Therefore, I believe that the measure will be ineffective and partial in this context. It is yet another measure to try to mitigate the impact of inflation that seems unleashed and unanchored. The Government has few fiscal tools to implement a robust revenue policy as you would like, but nor can it freeze rates or delay the exchange rate because there are no margins to be able to do it as in 2021Manoukian concluded.
Economy is enthusiastic about a lower inflationary inertia of food in June
Meanwhile, Bisang assured: “The Price controls are patch measures that can be temporarily sustained in the face of a punctual shock.It will be useful in the framework of a stabilization plan. Now, they are not a policy that by itself will control inflation or that can be sustained indefinitely.”
“On the one hand, withMonitoring compliance is complex”he assured and added that, on the other hand, “performing the adjustments correctly to avoid shortages requires precision and knowledge of costs and structure of each sector. But even If all this is achieved, in the long run, it generates a distortion in relative prices that sooner or later must be corrected. In the background you have macrostructural problems that are not so easy to fix,” he said.
Regarding whether fair neighborhood prices can work, the economist concluded: “The measure It would seem to be good in the sense that it resolves the distortion that was generated between the Chinese supermarkets and department stores and the large supermarkets. In any case, it is not a measure that by itself resolves inflation, it is complex to control and it remains to be seen what the effective impact on prices will be”.
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