On Friday at the CCK event for the relaunch of the Fair Prices program, a version of the price controls applied by the Government, Sergio Massa, Minister of Economy, pointed out the following.
“
No one in this agreement has to cheat.
Some companies limited the supply of products in the gondolas stating that they had no supply in the value chain.
Just as we once said that we could not allow companies to under-invoice or over-invoice imports or exports, we cannot allow access to public benefits not to end up redounding to the benefit of the consumer or the citizen.
We have to make the effort together, avoiding mischief.
Just as we put incentives,
we also have to expose those who cheat the State
”, warned Massa in the CCK.
In Economics there is something called price
(p)
per quantity
(q)
-pxq is its algebraic expression-, and one of its maxims says that both variables cannot be controlled and a choice must be made between letting prices rise (plus inflation). or that there are shortages (limited offers in the gondolas).
Massa aims to sustain p and that q does not decline, monitoring that businessmen do not "cheat"
.
The Ministry of Economy knows the stabilization of inflation is the card with which the minister plays his image as a political leader for this electoral year and its future projection.
But what Massa does not mention is that a sharp drop in inflation would be costly
because the Treasury would lose revenue and a fraction of spending would increase in real terms, as is the case with retirements
, according to a recent study by the consulting firm Analytica, which leads the economist Ricardo Delgado.
“56% of primary spending is social benefits, pensions and social programs.
These items, whether automatically or discretionally, are adjusted based on past inflation.
If it were reduced in the coming months, more than half of public spending would increase in real terms, because the adjustments come with a lag
.
Meanwhile, tax revenues would also grow, but to a lesser extent: in real terms they are more insensitive to changes in the inflation rate.
As a result, the primary deficit, in a context of downward inflation, would grow”.
The IMF-committed fiscal target of a 1.9% deficit
is compatible with average monthly inflation of 5.5%
, an annual variation of 90% between ends, says Analytica.
In Argentina there is always talk of the benefits of lowering inflation.
They are undeniable.
But it also poses challenges for the Treasury.
The less prices rise, the more difficult it is for politics to hide the adjustment that it promised to make with the markets.
Or the other way around: inflation smears the figures and hides the adjustments of not updating assets and benefits.
It is the inflation trap
.