The advance of inflation, which is already reducing the population's consumption capacity,
accelerated its corrosive effect in the last two months.
The 25.5% rise already known in December, added to
an average increase in prices of 20% between now and March, would result in a drop in real wages of 10%.
The estimate, from the consulting firm Ecolatina, raises the question among its analysts: is there room for the dynamics of last year to return and the joint ventures to closely follow inflation or will
the recession derived from the fall in purchasing power contain the advance of prices?
.
“We believe that there will be a combination of both, where the recession will coexist with wage agreements that will slow down the eventual deceleration of inflation.
This entire
process will have costs - social and political -
that will be combined with a latent risk of spiralization as long as the ruling party has difficulties in carrying out its fiscal-monetary plan or obtaining at least part of the reforms proposed in the DNU or the Law. “Omnibus” sent to Congress,” explained the consultant.
Unlike what happened in much of 2023, when private consumption remained around 1% despite inflation that exceeded 200%,
now the situation appears to be different
.
“The change of government not only implied a strong devaluation of the exchange rate.
The correction of relative prices also includes the “liberation” of many prices - elimination of agreements, prepaid, fuel, telecommunications - and the increase in public service rates.
This whole
set guarantees several months with double-digit inflation,”
according to Ecolatina.
Given the expected inflation, so that purchasing power does not erode in the coming months, salaries must keep pace.
Getting out of this process “tied” seems difficult: only the jump in inflation in December will leave losses of around 10% in real terms.
Rocío Bisang, economist at the consulting firm EcoGo, also explains: “in the first months of the year we expect to see a drop in real wages, which will be cushioned by the increases achieved in the joint negotiations that began this month.
What we are seeing in terms of
joint ventures is that they are increasingly shorter
(many monthly) and many include trigger clauses that allow them to be adjusted retroactively for inflation.”
In this sense, Ecolatina also expects "a combination of bimonthly/quarterly joint ventures that will seek to “beat” prices, with others with monthly adjustments - some virtually indexed -, where fixed sums will surely also proliferate to compensate for a diminished purchasing power." , he estimated.
"However,
all this will not be enough, and the minimum purchasing power will lose 10% of its value during the summer,
so the effect of the recession - and the salary anchor - will also play its role in these months," added the consultant.
The forecast regarding the fall in salary purchasing power thus adds to a situation that dates back several years.
A work by economist Nadin Argañaraz recently reported this, when he reported that "in the last 72 months, Argentine formal workers lost 11 salaries since 2017. While informal workers lost 19 since then.
According to estimates by the State Workers Association (ATE) at the National Institute of Statistics and Censuses (Indec), the minimum wage - which today is $156,000 - should have been more than
$700,000 last December to satisfy minimum needs.
Taking into account that the value of a Total Basic Basket for a typical family is $495,798.32.