The slowdown in prices is consolidated. It is a fact. Everything seems to indicate that April inflation pierced the double-digit barrier, thus accumulating five months of decline after the abrupt jump in December (25%). Therefore, the hubbub reigns on the social networks linked to the President. Anarcho-capitalist policies are bearing fruit, libertarian exegetes maintain. The main balances of the economy are balanced and prices are beginning to decline, they declare.
The price of slowdown
Although we will have to wait until May 14 to know Indec’s inflation report, different private consulting firms revalidate the government’s projections on prices. The most optimistic, even, estimate average increases of around 7 percentage points. According to the investigations that we were able to carry out from The New Morning There is a slowdown in prices in supermarkets and local stores. This was commented on by the main chambers that bring together these businesses in Córdoba.
“The contraction of an economy in a recessionary phase,” said the president of the Córdoba supermarket chamber. Victor Palpacelli, It leads “our suppliers” to implement “strong promotion strategies (due to dynamics and purchase volume) that have not appeared in a long time.” The food industry has “stagnation and overstock”, which drives prices down in order to sell, they reflect in the sector.
“The food industry has “stagnation and overstock”,
As a result, the general increases that supermarkets have had in April “are around 4 and 4.5%”, with products such as sugar or some oil brands falling. Although within the marketing chains there is a “levelling of the lists received, with more attenuated prices”, the increase in meat stands out with an average of 8 percent. As well as the increases in the main products of the basic basket that moved below the average.
Inflation decreases, but so does sales
Despite the slowdown in prices, the supermarkets’ balance sheets are negative, said the person who also presides over the Almacor network. During the past month there was a contraction in consumption “in all areas of the supermarket.” So, just as there is a drop in sales from the food industry to marketing channels, there is also a contraction in their sales to final consumers. Indeed, the sector sold 7% fewer units and closed another month with a drop in profitability.
For their part, local businesses suffer from the same reality; The decline in inflation does not stimulate demand that, far from rebounding, is collapsing. The drop in sales in warehouses is 30% and puts them in a “critical situation,” he emphasized. Vanesa Ruiz from the Córdoba Warehouse Center to The New Morning.
Ruiz: “We clearly observed a slowdown in inflation percentages, similar to those of October last year, but hand in hand with an abrupt drop in consumption.”
It is not a good scenario for commerce, which must face, in addition to the reduction in demand, an increase in fixed costs as a result of the increase in electricity. Warehouses, no matter how small they are, must have at least 3 cold units, they explain in the sector. In fact, refrigeration, plus business lighting and basic security elements (cameras and alarms), bring the increases in light to over 200%. Therefore, the slowdown in prices is not perceived by businesses or consumer families.
Just as the recession impacts something as basic as the demand for food, it also compresses the consumption of other more dispensable goods. This is observed in the latest survey by the Córdoba Chamber of Commerce on shopping malls and shopping trips. Where there are two pieces of information worth highlighting that explain the crisis in the sector. Compared to April of last year, sales volume contracted by 26%, while the profitability of the businesses surveyed fell 14%. Consequently, during April, 80% of merchants reported having sold less than they expected.
The fall in consumption impacts treasury revenue
As expected, the fall in consumption is beginning to take its toll on the collection of libertarian coffers. Since more than 50% of tax collection is tied to consumption, its depression depletes fiscal resources. The figures from the Public Revenue Administration for the month of April show this with an interannual drop in real resources of around 13%. According to a consulting firm dedicated to the analysis of tax collection, VAT closely linked to the level of consumption plummeted by 9% and this explains the decrease.
In effect, this puts the anarcho-libertarian government in a dilemma, since to safeguard the fiscal surplus they must raise taxes or spend less, thus worsening the recession.
Unemployment is looming
A recession that is largely explained by the stagnation of income in the face of increases that average 90% in the December-March period as well as by layoffs. According to the latest official report (based on the SIPA registry), 40 thousand jobs were lost between December and January in the private sector alone. Although there are still no official records for the following months, it is assumed that the contraction continued until April, as there is no indication that the performance of the labor market will abandon the contractionary trend.
The contraction of the labor market is a reality that is beginning to worry a society that was dealing with high inflation, low salaries, but low unemployment figures. What is presented now is different. A scenario that was not used to and, therefore, is unknown. If the slowdown in inflation consolidates, we would go from a scenario of high inflation with a high level of consumption to one of moderate increases, but with low demand.
