He consumption of households in Argentina experienced a significant decrease in May 2024, with a year-on-year drop of 7.7%, according to the latest Consumption Indicator (IC) of the Argentine Chamber of Commerce and Services (CAC). The seasonally adjusted figure also shows a monthly decrease of 2.2% compared to April. The private index once again marked a negative number after rising 0.6% in April compared to March.
The IC, a monthly measure developed by the CAC, tracks household consumption of final goods and services, providing crucial information on the state of trade and economic activity in the country. The accumulated data for the first five months of 2024 indicate a year-on-year decrease of 4.3%, highlighting a continued downward trend since the beginning of the year and marking the steepest drop since February 2021.
This decrease in consumption occurs in an economic context where inflation rates are trending downward. “This occurs in an economic scenario where inflation continues to slow down and has marked its lowest value since January 2022. In May 2024 the monthly rate was 4.2%, with a year-on-year rate of 276.4% and an accumulated annual rate of 276.4%. 71.9%”, highlighted the statement.
“While the inflation rate continues to slow, this was due to the iThe gas and electricity tariff increases scheduled for May have been postponed and would take place in June. The implementation of these increases could accelerate inflation again and negatively impact the purchasing power of families., increasing spending on housing, but reducing purchasing power for other items. The recessionary context reduces the possibility of nominal increases in wages that would allow a recovery in demand. In addition, the increases in AUH and food cards and the persistence of bonuses for retirees seem not to be enough to rebuild the purchasing power of the most vulnerable sectors,” the report analyzed.
The sectors of recreation and culture (-42.6%) and clothing and footwear (-27%) were the most affected. In the case of clothing and footwear, “It is explained by real household income and credit card debt that fell year-on-year, generating the postponement of consumption that is not essential for daily life,” according to the report.
Transportation and vehicles showed a drop of 11.3% year-on-year, influenced by “a level of automobile registrations that fell by 8% year-on-year, an increase in the price of gasoline and a decrease in sales of this fuel.” .
“The recessionary context reduces the possibility of nominal increases in wages that would allow a recovery in demand”
On the other hand, the category of housing, rents and utilities experienced a 6.3% increase YoY in May, driven primarily by higher electricity demand due to lower than usual temperatures.
Despite the slowdown in inflation, the economic situation remains complicated, with a recessionary context that limits the recovery capacity of demand and nominal increases in wages.
“The performance of the Argentine economy and consumption present a similar behavior, which is expressed in interannual variation rates that usually increase or decrease along the same lines. In 2024, the AIs of both the EMAE and the IC present a negative initial behavior that continues until the latest available data. In May, the IC went through a new contraction, while the Argentine economy showed a new negative variation during March: in both cases, the fall was the deepest of the year,” added the CAC.
