Argentine inflation rises to 47.1% and sales fall 9.8% as 'Macrieconomic' stagflation takes toll.
Inflation in Argentina reached 3.1% in June according to National Statistics Bureau (Indec). As has been the case since the Mauricio Macri administration took office in December, Indec refused to release an annual figure; but the City of Buenos Aires Statistics Bureau reported inflation at 47.1% compared to June 2015, the highest annual rate since January 1992.
Monthly inflation for goods slowed in June to 2.3%, the best showing since November; but remained high (4%) for most services - particularly health care (8.7%) and utilities (8.6%). Food prices rose by 3%.
Prices of all goods have risen by 43.5% in a year, while service prices did so by 50.4%. Service prices, which historically tend to rise more slowly than those for goods, were boosted by 186% higher rates for gas, 253.3% for electricity, and 282.8% for water. Service inflation was also steep in postal services (53.5%), public transport (50.3%), and private health insurance (48%) - all of which have suffered deep cutbacks in subsidies.
Consumer prices, according to the Buenos Aires statistical bureau, have risen by 29.2% so far this year and by 34.3% since Macri decreed a 40% devaluation in December.
Retail woes
Retail sales, meanwhile, continued to plummet, with the CAME medium business chamber reporting a sales decline of 9.8% by volume in June compared to the same month last year; appliances and electronics (-19.2%) and jewelry (-14.7%) suffered the steepest declines. New auto sales, one of the few bright spots so far this year thanks to a cut in luxury taxes, rose by 5.8% in the first half of 2016; but fell by 10.2% in June. Used car sales, meanwhile, plummeted by 30%.
June was the sixth consecutive month of declining retail sales, with sales down 6.4% so far this year. These woes are aggravating a difficult business climate in which 60% of small and medium firms report being in the red. Thousands of business have closed in the last several months, including 400 Buenos Aires restaurants - over three times the number during the first half of 2015 - with almost no new openings.
The most affected have been steakhouses and seafood restaurants. The Argentine Beef Industry Chamber (CICCRA) reported a 7.7% decline in consumption and an 11.4% fall in production over the same time last year. Poultry consumption, which tripled from 2002 to 2015 as Argentines reached for more heart-healthy options, fell 12%, and seafood consumption, by a whopping 35.4%.
One bright spot was pork consumption, which jumped by 23.8% in June over last year as price outweighed other considerations. Pork farmers, however, decried the Macri administration's decision to allow the Danish Crown Corporation to export pork and sausage to Argentina, which they allege is being sold to Argentine supermarkets at below-market (dumping) prices.
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