Javier Milei
is happy with having
Luis Caputo
on his team and the minister is also happy because he believes that the President lets him act.
One of the most visible and controversial faces of the adjustment was the minister's decision to eliminate subsidies for urban transportation in the provinces.
The interpretation was immediate: Milei withdrew the Omnibus bill from Congress because he considered that there would be no particular approval and that cut of items came immediately.
It was Caputo who was in charge of generating the message that none of the political failure of the ruling party clouded the process of adjustment of public accounts aimed at having a financial surplus.
Share prices collapsed and bonds fell, but not to the extent expected:
will this be an indicator that the market believes the Minister that the fiscal surplus objective has absolute priority regardless of the political costs?
In Economy they say yes, and they quietly celebrate
a certain moderation in the pace of price increases
that would be taking place in these days of February.
They are
limited and silent celebrations
because the increase in the cost of living this month would be around 18%, driven by electricity, gas and gasoline rates in addition to prepaid bills and school supplies that started their traditional seasonal rise.
But the adjustment, based on a significant
liquefaction of pensions, salaries and fixed-term deposits in pesos
, entered a new stage different from that which has characterized the Argentine economy since 2023.
The new cycle is generated from the sharp drop in sales since the beginning of the year in response to what was the price stampede after the December devaluation.
Today, companies and businesses have left behind the concern of not losing in
the rebranding race
and prioritize attention to the
quantities sold
.
Some shopping mall businesses say that sales fell by up to 50%;
in the beverage sector they detect drops of 10/12%;
textiles, 30%;
construction, 20%;
medications, 3%.
The discount war is also evidence of the new stage crossed by the downward trend in quantities sold.
Discounts
of 50 to 70% on the second unit in supermarkets were reborn, those on bank and media cards, and discounts for retirees gained prominence in the families' spending basket.
Economists always resort to
the PxQ formula
(prices for quantities) to define the moments of consumption and, in this, the smallest quantities sold gain prominence.
For families, the adjustment is very strong and a key question in the environment revolves around
how much recession will be necessary
to lower inflation in a process like the current one of deregulation of a good part of prices.
For Economy there is a previous partial response related to the definition of
a path for the official dollar starting in March
.
The $800 dollar that started after the December devaluation is updated at a rate of 2% monthly, which is
clearly lower than inflation,
which is why some market operators and analysts consider
an exchange rate jump in April inevitable.
The vision of Economy is very different
and the dominant point of view is not only to maintain the fixed exchange rate policy (floating was banished) but also to
deepen the use of the dollar as an anchor
in the attempt to moderate the rise in prices. .
But that vision may change in the coming weeks, although
the Central Bank has purchased US$6.8 billion
since the devaluation, the need to provide a good exchange rate to rural exports, so that they sell more dollars, will be a compelling argument. to avoid the feeling that the dollar is behind.
Devaluating to encourage more dollars to enter or not doing so to prioritize moderation in price increases will be next month's dilemma but, in the meantime, a key will be to check the political future after the failure of the approval of the Omnibus Law in Congress .