Why food inflation is already different from international prices

U.S.A.Why food inflation is already different from international prices

Photo Reuters / Marianna Nedelku

For months, the government has insisted that the problem of food inflation in Argentina is mainly due to the development of international prices, from which it should be isolated. But in reality, Keeping up with the pace of global growth may be a better idea. That, at least, if the progress of food inflation is followed in the main countries of Latin America, in the context of the post-pandemic period, along with the rise in energy costs, had a clear impact and where the rise in prices is a concern. subject to. Then. However, this pressure is far removed from the rise in prices in Argentina’s supermarkets, which grow at a monthly rate 5 times faster than the average of the region’s most important economies.

This stems from a follow-up by the Mediterranean Foundation’s IERAL, which shows that a group of 10 Latin American countries, including Brazil, Mexico, Chile, have increased food prices by 11% since the start of the pandemic. They doubled in Argentina—except Uruguay, Paraguay, Peru, Ecuador, and Colombia—Venezuela. That is, the price of food in the country today is 100% higher than at the end of 2019.

As expected, the meat price jump after months of struggle has fueled panic in the government, a year-end watchful of consumption and high inflation, which, far from yielding, has intensified over the past weeks. Without causing any surprises, the official response was intended to agree to a price freeze—which was unprecedented, achieved for only 3 days—while evaluating further measures for the sector, for which the Commerce Secretary himself , Roberto Felletti, nothing new considered: an increase in withholding and a cross-subsidy scheme implemented for oil. The rationale behind the use of these “traditional” tools is the need to “unlink” prices.

The huge gap between the evolution of food prices in Argentina and the rest of the region.  Source: Irali
The huge gap between the evolution of food prices in Argentina and the rest of the region. Source: Irali

“If we want to ensure meat, chicken, bread and milk, we have to separate domestic prices from international prices”, Felletti pointed. The truth is that, while global price increases are undeniable, In Brazil, food prices increased by 12% in the past 12 months, in Colombia by 14% and in Mexico by 7%, in contrast to all those in Bolivia, where practically no variation in prices was recorded., At the other end is Argentina, which multiplies the percentage of any of these 10 countries surveyed multiple times, with food and beverage inflation of 51.4% on a yearly basis and accumulating 41.2% as of October this year. This is in spite of the fact that, as noted by The Economist Juan Manuel Garzon, responsible for monitoring consumer price indices for food and beverages in various countries, contrasts the continuation of high inflation with recessions that affect domestic food prices: the official exchange rate and international prices. Goods, While the dollar rose from 3.3% per month in the first quarter to 1.1% in recent months, international prices (FAO basket) also declined from 3.2% to 1.3% per month in the same period. Thus, it is more complicated to explain the inflation of gondolas in Argentina based on the evolution of prices in the rest of the world, even if the phenomenon is somewhat present.

“I wish Argentina had more ‘links’ with what is happening in the region, the level of inflation in the country is clearly unusual” (Juan Manuel Garzón)

“In all countries in the region, there has been a more stable movement in food prices than in Argentina. My reasoning is quite different from that of the Secretary (Feletti). I wish Argentina had a better understanding of what is happening in the region. With more ‘links’, the level of inflation in the country is clearly abnormal,” Garzon said. The Economist stated that the evolution of the price of food in the country is “clearly due to internal factors, linked to economic policy and government management, that drive the prices of food and all commodities in the economy.”

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