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The race against inflation quotas to consume, while the dollar resists

2021-08-03T23:01:17.589Z

Alberto Fernández relaunched the Now 12-30 plan and warned about prices. The dollar and the background elections.



08/03/2021 19:25

  • Clarín.com

  • Economy

Updated 08/03/2021 19:45

With inflation at 50% per year, buying a refrigerator in 30 fixed installments with an interest of 40.18% per year is a possibility of the

Now 12-30

plan

launched by the government and which is in effect until January of next year.

It also opens the possibility to buy in 24 installments and with an annual rate of 30.33% from

bicycles

to

construction materials

.

The extension and prolongation of the plan

now

until the end of the year with a fixed fee aimed mainly at the

middle class

has almost the only restriction, in addition to the obvious one of the families' ability to pay, the

debt limit

set by each bank to Your clients.

The announcement of the plan by President Alberto Fernández

, in

addition to being clearly suspected of being an electoralist, was simultaneous to a significant warning.

The President

called on businessmen not to increase prices

under the increased demand for consumer goods that the official plan would unleash.

Now 30: the Government offers refrigerators, washing machines and technology to be paid in 30 installments with an interest rate of 40%.

Photo: Mariana Villa / Los Andes

In Argentina, from the paradox in which

real estate

is bought in cash with dollar bills and

 slippers in 12 installments

and with a subsidized rate, it seems that any surge in demand automatically translates into price increases.

The presidential warning is valid but it also rests on the official strategy with an interest rate subsidy that makes any cash purchase of the products included in Now12-30 inconvenient unless it is without a ticket and with a discount of more than 21% of the VAT.

The demand for subsidies is on the rise and in recent days spokesmen for the ruling party came out to highlight that some businessmen who were importers in the government of Mauricio Macri now produced here for the domestic market.

Those entrepreneurs highlighted three "key" elements that underpin their change.

Namely: the delay of

electricity and gas rates

, the control of

imports

and the

lowering of the interest rate

that some can obtain.

In other words, those entrepreneurs who used to import are now subsidized on the side of rates and interest and have a natural market reserve generated by the exchange rate.

In this context, Fernández's warning becomes relevant but, on the other side of the counter, the businessmen have their arguments.

They know that the increased demand is

circumstantial

and determined by the 

government's political need

to encourage consumption by the ailing middle class.

And that a significant part of the costs are determined by a

threatening

dollar price

in the free market.

Although the Central Bank

loosened its hand

on import payments (it authorized them for US $ 5.909 billion in June and about US $ 5,600 last month), the uncertainty about these authorizations until the end of the year leads entrepreneurs to

calculate their costs

based on a free dollar around $ 180 that has a distance of 86% with the wholesale dollar of $ 96.81.

A strong official argument in the attempt to calm the increases in products with a high imported component, such as electronics or bicycles, is that the

wholesale dollar

grows less than inflation and that the Central Bank has sufficient reserves to guarantee

exchange rate tranquility

until the end of year.


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Simultaneously when Alberto Fernández launched Now 12-30 and the warning not to increase prices, the Deputy Chief of Cabinet, Cecilia Todesca, assured that they will not devalue strongly the peso.

And the Central Bank let it be known that they continue to buy export currencies at the beginning of August (US $ 70 million, on Tuesday).

All provisional, although the Government assures, now with a little more foundation due to the US $ 4.3 billion from the International Monetary Fund that will enter at the end of the month, that a strong devaluation of the peso cannot be expected, even after the elections.

They believe that

anesthetizing the

official

dollar by

making it grow significantly below inflation will end up paying off this month to the point where they expect the August cost of living increase to "start with a 2" instead of 3 as it has been doing for some time. months.

The bet is difficult, the increase in the cost of living in July, according to the

eco go

consultancy

, was 3% with a rise of 3.8% in food.

According to this survey, inflation for the first seven months of the year

reached 29.2%,

exceeding the 29% mark set in the National Budget for the entire year.

Inflation 2021 hides a notable inequality between regulated and repressed prices and other free ones that will remain to be resolved at some point in the future.

A graph from the

Capital Foundation

reflects the wide dispersion of prices between, for example,

electricity, gas and transport rates

that grow less than 20%, housing rents that do so by around 40% and cars or

materials of construction

that increased more than 80% in the last year.

Perhaps the

paradigm

of price misalignments was formulated by YPF when it announced that it will keep fuel prices unchanged until the end of the year despite the rise in Brent oil worldwide.

Happy consumers, but what will the shareholders who invested think?

The pre-election time is imposed and the beneficiaries of the subsidies are called to silence.

In Argentina everything seems malleable in terms of prices, but the result is clearly deficient.

The 50% that marks the annual inflation speaks for itself of the failure.  

Look also

For Goldman Sachs, the new IMF funds will ease the adjustment, but they are not a macro solution

The blue dollar remained at $ 180, after the relief of the arrival of the US $ 4350 million sent by the IMF

Source: clarin

All business articles on 2021-08-03

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