The ‘grieta’ rift that divides Argentines is not only political. Market studies are revealing two very distinct poles when it comes to measuring consumption.
On the one hand, there is an upper middle class consolidating its recovery and gaining access to such consumer luxuries as eating out, ordering in or takeaway, travelling abroad and spending on name brand labels at the shopping centres whose sales are on the rise.
But the lower echelons of the middle class increasingly have to juggle their various salaries which fall much further behind the average, as informed by INDEC national statistics bureau.
The economic recovery, reflected by such statistics as 5.8 percent annual growth, does not reach everybody alike. Inequality can be clearly seen when following consumer patterns.
While the sales of items of mass consumption are thus stagnant, consumer durables (domestic appliances, electronics and other articles) and imported goods are on the rise, as is outgoing tourism with record dollar spending in destinations such as Miami, Brazil, Chile and others responding to the tastes of the typical Argentine, one of whose main pleasures is generally to travel.
According to a study carried out by the Moiguer y Asociados consultancy firm, consumers in the lower middle and middle classes are running into many difficulties when facing basic expenditures, while the upper and upper middle classes are expanding their spending with trips and purchases abroad while hoarding dollars.
Half the population cannot make it to the end of the month, according to the study, while 30 percent sacrifice spending to pay their utility bills, which have multiplied several times since the Javier Milei government updated public service pricing. Of those consulted, 23 percent buy dollars while 11 percent of consumers use overseas platforms.
A typical family in this city paying a monthly gas bill of 20,000 pesos in November 2023, was paying 200,000 pesos last month – a tenfold increase.
The costs of heating a flat have thus multiplied in the last 18 months with water going up even more during this government with the aggravating factor of AySA’s water and sewage services already rising steeply in the Alberto Fernández government.
Sales fell last month in items like food and beverages (7.6 percent), footwear (0.5 percent), textiles and garments (1.8 percent), pharmaceuticals (1.5 percent), toiletries (5.2 percent) and electric and construction materials (2.6 percent), according to the CAME retailers association.
On the other hand, the import of goods from abroad rose 60 percent, consumer durables 99 to 115 percent (depending on item), car licensing 94 percent year-on-year, outgoing tourism 80 percent and premium petrol 18 percent.
Fernando Moiguer, CEO of Moiguer Consultora de Estrategias, said that the economy gained momentum in the first quarter but decelerated in the second with an impact on the mood of consumers.
Moiguer said that the upper class managed to expand its consumption because “their salaries are growing in dollars with the 'cheap dollar'” while the middle class is at the mercy of the evolution of public service billing.
For the most part, the lower classes can fall back on the AUH (Asignación Universal por Hijo) child benefit, which has risen more than inflation.
Hardest hit by falling purchasing power, pensioners find it increasingly difficult to reach the end of the month with the grandparents increasingly leaning on their children or other relatives to meet their expenses in the face of the enormously higher health costs.
by José Calero, Noticias Argentinas
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