Analgesics to try to calm inflation

If price controls or freezes produced results, the ineffable value

Guillermo Moreno

would not have intervened

Indec

for almost nine years, nor manipulated their indexes to mask the recurrent failure of these interventionist measures, which always attack the effects and not the causes of the

l & # 39; inflation

.

The government of

Mauricio Macri

end the interventionism of the K era and quickly recover the reliability of official statistics after the designation of

Jorge Todesca

in front of the Indec. But the diagnosis or progressive treatment to reduce inflation was not correct. In round figures, they climbed to nearly 40% in 2016; 25% in 2017; 48% in 2018 and targets more than 35% by 2019.

This disappointing performance would not put Argentina near the podium of the countries registering the largest price increases, behind Venezuela, Sudan and Zimbabwe, according to the IMF. The high and persistent inflation – which already records 11% this year – has been placed at the top of the social concern rankings and has complicated the chances of re-election of the president and several pro-government governors. As a result, political tensions have arisen in Cambiemos' own ranks.

Given this scenario, the forthcoming measures announced by Casa Rosada are far from expectations that the political wing of the ruling party has contributed to feed in recent days and have generated some confusion. Rather, it is a modest political response to the request to "do something," which a construction worker personally introduced to Macri a few weeks ago at a public event.

This is essentially the extension of the current list of the 560 products in the "Career Awards" program, with some 40 other well-known brands belonging to 12 categories of food and beverages, whose prices will remain unchanged for 180 days .

This delay is not a coincidence: its expiration will coincide with the date of the presidential elections and the governors in the CABA and in the decisive province of Buenos Aires. This is also an exception to the current system, which provides for price adjustments every three or four months, as the case may be.

The additional list comes from new agreements negotiated directly and against the clock by the Ministry of Production with the main industrial companies and the big supermarket chains. Thus, there will be a new set of prices supported, agreed, but also fixed in these commitments. A comparison of "courageous prices" (unchanged for six months), recently promoted by Carrefour for its branded items.

Although "reasonably priced" products represent only a very small part of the vast universe of mbad consumption (and the supply of supermarket chains, which equates to one-third of the total), the impending expansion presents a different peculiarity.

The new articles coincide with those of the basic INDEC food basket that determines the thresholds of indigence and poverty. In other words, although this limited freeze barely changes the ammeter of retail price inflation (where price increases and regulated prices weigh heavily), it will mitigate the change in the CBA, which has increased year-over-year higher than the general level of the CPI due to the incidence of food and beverages.

In official offices, admit that these agreements are aimed at meeting the needs of the vulnerable population rather than at reducing inflation. They also explain that, unlike in the K era, "care prices" are not seen as an anti-inflationary policy but as a reference for consumers.

This statement is valid if we take into account the fact that after the inflationary shock of 2018, it is increasingly difficult to know the unit prices of many products. In mbad consumption, the values ​​in gondola are not the same as those paid by the public, the discounts varying each day depending on the mode of payment; and weekends are multiplying offers by quantity to liquidate stocks, without including the prices agreed with the government. In other words, each price is the result of an average, also difficult to calculate when withdrawals are accelerated, as is the case for inflation in the range of 3.5 / 4% per month.

In this context and although the increase in costs does not slow down, any price freeze looks like a tense spring that will sooner or later unfold. Experience also shows that margins sacrificed on supported prices are offset by similar price increases, widening their gap and pushing demand towards the cheapest and least profitable product for manufacturers and supermarkets. It is not by chance that many of these products are located in the most uncomfortable places of the gondolas and still have empty spaces.

Officials negotiating the new agreements ensure that the supply of first brands is guaranteed, even if, from the private sector, they warn that logistical and distribution problems may arise before additional demand is calculated.

Of course, these measures are equivalent to badgesics or patches without curative effects on the underlying macroeconomic disease. Many scholars are even referred to as "fulbito for the podium", while the government hopes that starting tomorrow, daily auctions of dollars will reduce fluctuations in volatility and that the wave of rate adjustments will end in May, despite the unknown amount of fuel. In this perspective, inflation could fall to the monthly level of 2%, with some increase in consumption in June after the semi-annual bonus, the new pension adjustment and the different wage increases in parities.

In any case, this modest picture shows the government's narrow margins of economic policy management in the six months preceding the elections. On the one hand, the program with the IMF involves fiscal and monetary restraints as a lengthy treatment aimed at reducing inflation, at the cost of a slowing recession. On the other hand, in the own ranks of Cambiemos, they emphasize that this dynamic goes beyond the electoral calendar, favors the opposition and insists that isolated measures be taken to improve the expectations.

Not only that. A "friendly fire" can also fuel mistrust of the future. A test is the controversial "law of gondolas" presented by Elisa Carrió, in the event that the big supermarket chains are responsible for the price rise and which is refused when they operate in neighboring countries with a inflation of one digit a year. If successful in Congress, this interventionist project of 42 articles (under the law on the promotion of competition in the food value chain) could well be voted by the Peronist blocks.

The requirement of "written food contracts" and "real price" with SMEs, cooperatives or primary producers is one of the most conflicting issues. Another, forbids to attribute to a single brand a space greater than 20% of the gondolas for similar products, and imposes to locate 50% of the local products and / or manufactured by SMEs at exhibitors adjacent to the boxes. It also states that "reasonably priced" products must be placed in the gondolas at a height of not less than 90 centimeters or not more than l60 (sic); It provides for a "fair absorption" of logistics and replacement costs and, in the event of non-compliance, penalties of up to 1% of the total gross billing.

On Twitter, the economist and maker of sausages Gustavo Lázzari (the son of the legendary "Lita") does not spare critics on this initiative. According to her, in addition to regulating everything, the contracts between the food trade links would be taxed in the district of Buenos Aires with the stamp duty and an effect comparable to that of the gross income. His supporters are not short of those who propose that each price displayed also include the high proportion of taxes that are transmitted to all consumers.

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