Renewing clothes, changing the 0Km and eating out: “luxuries” increasingly removed from the consumer’s pocket

In the inflationary processes of the range that prevails in Argentina, closer to 3 percentage figures per year than the figure that predominates on almost the whole planet, it is common that year after year the average composition of household expenditure changes, because the prices of goods and services evolve at different rates, especially since the State manages and regulates several of them.

And it also influences changes in consumption habits, changes in the purchasing power of family incomes, which generally deteriorate when inflation accelerates. “Prices go up the elevator and wages go up the stairs,” analysts of the local situation often repeat, the phrase coined by the president Juan Domingo Peronto justify state interference in the economy, with policies aimed at imposing changes in the distribution of income.

The INDEC only reports the variation in the prices of a basic basket of household expenditure, because it is operationally almost impossible, on a month-to-month basis, to consult the evolution of the consumption habits of the population, beyond seasonality and the average weighting of the year. This is what is known in the world of statistics as the German Economist Index (Ernst Louis Étienne) Laspeyres -quotient between the value in the current period of the quantities consumed in the base year and the value that this consumption had in this origin- and for this the fixed reference is the last household expenditure survey (ENGHo) corresponding to 2004 /2005, excluding those intended to increase wealth, specifies the methodological report of the agency, although the CPI includes the variation in the price of “vehicle acquisition”.

The INDEC only reports the price variation of a basic basket of household expenditure, because it is almost impossible to consult the monthly evolution of consumption habits.

Thus, one way of approximating the evolution of the structure of the family budget is, from the reference year, to update each component of the main expenses due to the price variation reported by the INDEC, in order to get the current value of the basket. fixes the consumption and determines the new contribution of each to the general total, without modifying the initial amounts of each good or service.

This exercise showed that at the start of the presidency of Alberto Fernandez, on December 10, 2019, the average household in the Greater Buenos Aires area allocated 25.2% to the purchase of food and beverages; and 3 years later it has come to represent just over 26%; Clothing and footwear increased their incidence from 7.4% to 10.8%; and Leisure, Restaurants, Hotels and Culture as a whole went from 16.7% to 18.8% -despite the persistence of poverty rates around 40% of the population-.

On the contrary, the consumption of Housing items – including basic services of water, electricity, gas and other fuels, and equipment and their maintenance – has lost its relevance in relation to the total: it has gone from 17.9% to 14.6%; Health from 9.8% to 9.1%; Transport and Communications -telephony and internet- from 14.9% to 13.3%; and to a lesser extent Education, from 2.9% to 2.7% of the total.

Over the past three years, there has been a general decline in real wage indices for the whole economy

During this period, the salary statistics of the INDEC, like that of the Ministry of Labor on the Taxable Remuneration of the Stable Worker (Ripte), take into account the universe of employees in a dependent relationship whose employers have presented the Certificate of Contributions and Contributions in one of the last three months) showed a general loss compared to the change in the consumer price index.

Ripte fell 2.9%; the private sector registers 3%; in the average of those employed in the public sector 4.5%, and the average salary of those working in the informal (black) sector has collapsed by 16.3 percent.

Therefore, it is very likely to estimate that the real consumption basket has varied from the notable change in relative prices which has determined that some have become significantly more expensive and others, on the contrary, have become cheaper, always in relation at the average rate of inflation, although it is impossible to predict to what extent the demand of some has fallen and that of others has increased.

According to the series of major items selected by INDEC and reported month by month, GlobeLiveMedia was able to detect that since the beginning of the presidency of Alberto Fernández for the average consumer, the possibility of renewing clothes has declined, since clothes have increased by almost 200 percentage points (pp) more than the CPI ( 504.2% versus 311.6%); Vehicle acquisition 140 pp; Vegetables, tubers and legumes 109 pp; Shoes 104 pp; and consumption in restaurants and out of home 81 pp, among which stood out due to their increased participation in the structure of family expenditure.

It is very likely to estimate that the actual consumer basket varied from the noticeable change in relative prices which caused some to become significantly more expensive and others, on the contrary, to become cheaper

Faced with such a price gap compared to the general level, the consulting firm Abeceb estimated that “Argentines must invest the equivalent of 25.3 average salaries to buy a mid-range zero-kilometer car. The number reflects an increase from the previous year, when 24.81 salaries were required, and over 2019, before the pandemic, more than 19″. The private study specifies that “the data come from wage data provided by the Ministry of Labor and prices from the Association of Concessionaires of the Argentine Republic (Acara)”.

Such a deterioration in the relationship between the price of the car and the average income has resulted in a 10% drop in the level of sales of 0Km units, at a rate in December 2022 of only 260,000 per year, far from the record of just over 684,000 cars shipped to the market in 2013 and 643,000 from the next peak, four years later.

In the case of semi-durable goods, sales of clothing and footwear in Shopping Centers reported by INDEC responded to the sharp increase in prices, compared to the general average, with declines in real values ​​of 15, 3% and 11.7%, respectively.

While in the case of household goods whose final market values ​​have moved almost in step with inflation, they have increased in real value by 13% between November 2019 and three years later.

On the contrary, clearly influenced by the policy of official price control and administration, during the first three years of the current government, the items Electricity, Gas and Water increased significantly less than inflation and lost their relevance. in the average household budget, 205 percentage points less (95.8% against 311.6%). Although, based on the segmentation of the removal of subsidies by income level, this gap will narrow in the coming months in the more affluent sectors.

It was followed by telephone and Internet services 150 pp; public transport fare 133 pp; Housing rent and ancillary charges 89 pp; Water, soft drinks and juice 76 pp, among others.

The persistence of price controls and regulations that limit the free performance of the economy predict that 2023 will not be a year in which there will be significant changes in the price structure in relation to the consumer, and therefore the deterioration economy is reversed the capacity and structure of household spending, beyond the exceptions that always confirm the rule and that do not affect more than 10 to 15% of the population.

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