The sale of home appliances dropped 22% in the last quarter

According to data published by INDEC, the billing (in nominal terms) of specialized shopping centersit received 5% from one year to the next during that period, but item prices, measured by the IPC – GBA Ecolatina, rose on average by 38%. % i.a., which clearly leaves the actual bill in negative territory (-22% i.a.).

The consulting firm Ecolatina underlines for its part that the first is that in the third quarter of 2018, the globalist effect, the driving force for the growth of television sales in the first part of 2018, is no longer present.

In this line, until June, the actual billing for television sets, video and photography increased by 75%, while the rest of the set only increased by 6.4% i.a. In the third quarter, the decline was widespread: the volume of the first fell by 32% i.a., while the latter fell by 20% i.a.

The second reason is the new macroeconomic context. The sharp devaluation of the Argentine peso and rising prices, including the disappearance of credit, caused a collapse in the demand for household appliances.

In this sense, the rise in the dollar has reduced the purchasing power in hard currency, discouraging the purchase of durable goods, but also accelerated inflation, while deteriorating the purchasing power in pesos.

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More specifically, in September, when the dollar reached $ 40 and uncertainty prevailed in the markets, the sector experienced a nominal 1.8% drop in billings, with prices in this sector rising more than 50% ia

Furthermore, After the exchange rate jump, home appliances and household goods have become more expensive compared to other goods in the economy: from September to October, the general price level rose by 12.7%, while article prices rose by 24%.

The outlook for the sector is not encouraging. We expect that appliance sales will decline more and more during the last quarter of 2018 and that they will not show any significant improvement in 2019.

Pay in pesos would only show growth in real terms by the middle of next year, and the improvement would not be enough to offset losses lost in 2018. Therefore, given the need to recompose the Consumption of goods deemed more necessary than durable goods, the purchase of household appliances would remain relegated in 2019.

Similarly While a significant decline in the interest rate is expected, it will remain at high levels, making access to financing, an essential sector tool, difficult.

Finally, we do not expect a relative decline in the prices of appliances that drive sales, as we expect the exchange rate to move in line with inflation (the price of appliances is tied to the dollar because of the large share imported sector).

Thus, as long as the economy will not be more stable, the cost of financing will no longer be accessible and wages will not be increased, sector sales will not show any recovery.