Argentina: Basic food basket products up to four times cheaper than neighboring countries

Argentina is experiencing economic uncertainty due to the sudden departure of Martín Guzmán from the Ministry of Economy, import restrictions, the soaring of the parallel dollar, and the lack of price references for durable goods items, such as household appliances, automobiles, or construction materials.

All these factors have a substantial impact and have resulted in an inflation rate of up to 9.5% during July in some basic consumption items. Meanwhile, the currency continues to devaluate against the dollar, consequently losing value against other regional currencies.

It is evidenced by a report by the consulting firm Focus Market, which revealed that prices in Argentina are up to four times cheaper than in neighboring countries if prices are taken in local currency and then converted to the dollar, according to the quotation of the respective countries.

“The Argentine currency has lost value against all the currencies of the region in its parallel version, so the border crossing leaves significant levels of savings to justify the passage from a neighboring country to Argentina, said Damian Di Pace, director of Focus Market, on the “ant purchases” that are taking advantage of people from bordering localities to Argentina.

“Exchange rate gaps also generate these distortions. Argentines want export settlements to be made at the official wholesale dollar, but the ant imports of people from neighboring countries are made at the parallel market rate,” he added.

“To observe such a wide gap – Di Pace pointed out – we have to travel to 1976, where the distance between the official dollar and the parallel dollar reached 263%. Today, with a gap exceeding 140%, all economic activities, whether goods or services, show an absolute variation and distortion of prices.

“On the other hand, as in only a month and a half, the devaluation of the peso against the dollar was 60%, and prices have not yet corrected in pesos that movement against the dollar in international terms, in the North American currency with neighboring countries that have incomes in dollars up to four times higher Argentina is a gift”.

“A country that needs to export and get foreign currency to meet its import needs and honor the payment of its debts, in just three years went from the dream of being the supermarket of the world, selling value added in our agricultural manufacturing, to being the ant importer supermarket of Latin America. Only a very large macroeconomic distortion can achieve this microeconomic effect in volume by the citizens of foreign countries,” said the economic consultant.

“The distortion is so great in our local economy that if we take the prices in dollars of domestic goods, we have significant inflation due to the delay of the evolution of the official exchange rate against inflation. However, suppose the same equation is made with the parallel dollar, our goods in purchasing power parity compared to all the neighboring countries in our region. In that case, Argentina is a gift, compared to what our neighbors can buy with the same amount of money in their own countries,” concluded Di Pace.

With information from Infobae