October 19, 2015
October 19, 2015
Inflation has been a scourge in Argentina for decades, and residents have developed ways of coping that include investing in dollars and shopping at wholesale markets. This month’s presidential election, however, presents the hope for a solution at the policy level. Many Argentines remain skeptical, though, that anyone has an answer to the problem.
BUENOS AIRES, ARGENTINA – A year ago, Marcela Pérez paid 5 pesos (53 cents) for a kilogram (2.2 pounds) of onions.
Today, she says she spends 25 pesos ($2.65).
Pérez, 48, says she has seen prices rise and fall for years. She is resigned to inflation.
“Because of the years I lived through, I feel that if someone can stop inflation, they are a god,” she says.
As a result, she is forced to employ a number of strategies to survive in Argentina’s unstable economy.
Pérez is one of many people who come to the Central Market in Argentina’s capital to buy goods at wholesale prices.
On a Saturday morning in July, the city’s streets were still deserted. But the narrow aisles of produce at the Central Market were clogged with carts as hands and noses inspected the produce and eyes scanned posted signs to find the lowest prices.
Gustavo Lamouret, 43, says he has been shopping at the Central Market since early 2014. The first time he went, he says, buying wholesale felt strange. But now, he shops there regularly because everything is cheaper than at regular supermarkets.
“With the excuse of inflation, people begin to charge what they want,” says Lamouret, 43. “You can pay one price or double on the same block. There are no parameters.”
Vendors say business has picked up as more people discover the wholesale market.
“In the last two years, more people arrived than ever before,” says César Adrián Tolaba, 29, a worker at the Central Market, while arranging squash.
A country’s inflation rate is determined by the increase in price for goods and services year over year. It is calculated using the Consumer Price Index, in which economists look at the prices of hundreds of commodities and services that people commonly buy.
As inflation rises in Argentina, the peso has increasingly less purchasing power, meaning residents are paying double, triple or quadruple the price for some goods from this time last year.
Government estimates suggested that inflation would likely hit 15.6 percent this year, while a report from the Finance Research Center, a project of Torcuato Di Tella University in Buenos Aires, suggests that residents expected a 30 percent hike by September.
The World Bank measured Argentina’s 2014 inflation rate at 28.2 percent – the third highest in the world. Sudan’s rate was about 30 percent that year, and Venezuela’s was 48.6 percent.
Photos by Lucila Pellettieri, GPJ Argentina
Inflation is not new in Argentina. The average inflation rate between 1944 and 2015 was 203.9 percent, according to Trading Economics, reaching an all-time high of 20,262.8 percent in March 1990. By contrast, the average inflation rate in the United States between 1914 and 2015 was 3.3 percent, while from 1951 to 2015, Argentina’s neighbor Chile averaged an inflation rate of 43.5 percent.
The price of some basic goods has been stabilized, despite the fluctuation of the peso. The program, Precios Cuidados, which translates to Care Prices, is based on an agreement between the national government and local businesses in 2014. The prices of about 500 products have been set, according to the Precios Cuidados website.
With general elections set for Oct. 25, voters say they hope the next president will solve the inflation issue once and for all, but it’s not clear how the candidates would handle the currency problems.
Mauricio Macri, the Buenos Aires city mayor of the Republican Proposal party (locally referred to as the PRO party), promises big changes to economic policies but has offered few specifics. Meanwhile, Daniel Scioli, the governor of Buenos Aires province and a member of President Cristina Fernández de Kirchner’s Front for Victory party, says he plans to hew closer to the course of his predecessor.
“In light of the lack of proposals from the candidates on how they plan to end inflation, it is difficult to predict if one of them could achieve it,” says Raúl Isman, a political historian at the University of Buenos Aires.
Lamouret, the shopper at the wholesale market, agrees. He says he believes inflation and safety are two primary issues that will drive voters to the polls. But he doesn’t think any candidate is capable of controlling the rising prices.
Fernando Messore, 25, says he would vote for any candidate he believed could end price hikes, but he agrees that no candidate can do that.
“In the long run, they surely cannot find a solution to inflation,” Messore says. “To me, it will happen like it always happens in Argentina.
“It’s cyclical,” he says. “Every 10 years, you have a moment in which you can buy yourself the blender, a moment in which you can buy yourself an LED (television). But a few years later, you can’t even buy water.”
Messore says he can’t rely on politicians for a solution. Instead, he finds his own methods of managing inflation. He buys U.S. dollars to protect his savings because pesos are more likely to lose value in this insecure marketplace. Dollars, he says, are more secure and harder to spend.
“Dollars serve to save,” he says. “Cash in pesos liquidates itself, not just because it loses value but because you spend it more easily.”
Pérez says she relies on fixed-price products. Otherwise, she waits for clearance sales or buys her clothes and goods wholesale.
“With what I spend on a brand-name T-shirt at a store, in Avellaneda I buy three,” she says, referring to a street where some businesses sell clothes wholesale.
Silvina María Romano, a political scientist and historian at the National Scientific and Technical Research Council, says people lack access to information about inflation.
“In Argentina, there is a very circumstantial discussion about inflation,” she says.
The causes of inflation are not understood here, she says.
“There are rivers of ink written about how difficult it is to control inflation for primary exporting countries that don’t put prices on their commodities,” she says.
Rishi Khalsa, GPJ, translated this article from Spanish.