Argentina's Macrisis: the poor lost 24% of their purchasing power; even the richest tenth lost 11%.
A report published last week by Argentina's National Research Council (CONICET) estimated that since the right-wing administration of President Mauricio Macri took office three months ago, Argentine households have lost 17% of their purchasing power on average. The trend was seen in all income deciles, moreover, and ranged from an 11.1% decline in the case of the richest tenth to 23.8% in the case of the poorest tenth.
The report, The Asymmetrical Impact of Higher Inflation in Argentina, pointed to Macri administration policies such as a steep devaluation of over 50%, export tax cuts, easing of export quotas on consumer goods, and cutbacks in utility and fare subsidies as some of the principal causes of higher inflation and the consequent erosion in real incomes. The report was based on research by Demián Panigo, Sergio Rosanovich, Fernando García Díaz, and Pilar Monteagudo at the Metropolitan Technology University's Labor Innovation Center (CITRA).
According to the report, "the period from November 2015 to February 2016 has not only registered the highest rate of inflation since 2002; but it has significantly altered the dynamics of relative prices to the detriment of the purchasing power of those with fewer resources."
Overall inflation rose from 24% in 2015 to 35% in February; but the impact on basic goods and services was both higher and more disparate. Food prices rose by 39%, average rents by 63%, and average utility rates by 405%. Inflation, according to the report, is not expected to ease and could reach 55% by October.
Because food and beverages make up a higher share of household budgets for the poor, rising food prices have impacted those in lower income deciles much more, proportionately, than those in higher deciles. Whereas the richest tenth lost 5% of their real incomes due to higher food and beverage prices since November, the median household lost 9% on this account, and the poorest lost 15%.
The 400% hike in average utility rates have likewise been felt most by the poor: they lost another 6.3% of their purchasing power on higher utility rates, while the median household lost 3% and the wealthiest lost 1.7%. Higher rent, for those who are tenants, have eroded real incomes by a further 4% so far; but because higher income households tend to pay higher rents already, the impact there was shared about equally by all income groups.
Food, beverages, rent, and utilities - the items most impacted by inflation under Macri - together make up 31% of high-income households' budgets, 45% for a median household, and 56% for low-income households.
"Higher income families tend to spend more on services (personal, leisure, tourism) and durable goods. Low-income households, on the other hand spend more of their budgets on food, transportation, rent, and utilities. Therefore, when inflation is being stoked by a currency devaluation or higher rates and fares, the principal victims are the poor." Accordingly, the study predicts that "for low-income sectors, there will be fewer resources devoted to leisure and a migration toward goods of lower quality."
A market study released yesterday by Spanish consulting firm Kantar Worldpanel, a UNICEF partner, estimated that demand for groceries and other basic household goods fell by 8% in Argentina in January, and that the only items that saw a consistent improvement in sales were store brands.
At: https://translate.google.com/translate?hl=en&sl=es&u=http://www.pagina12.com.ar/diario/economia/2-294503-2016-03-14.html&prev=search
And: http://eppa.com.ar/wp-content/uploads/2016/03/EL-IMPACTO-ASIME%CC%81TRICO-DE-LA-ACELERACIO%CC%81N-INFLACIONARIA-EN-ARGENTINA-FINAL.pdf
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