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Argentina faces a drop in consumption amid high inflation

Argentina faces a drop in consumption amid high inflation

Sales in small and medium businesses of Argentina registered a year-on-year contraction of 0.9% last February, which occurs in the midst of high inflation in the South American country.

According to a report released this Sunday by the Argentine Confederation of Medium Enterprises (CAME), retail sales of small and medium-sized enterprises (SMEs), measured at constant prices, fell by 0.6% compared to last January and accumulated a contraction also of 0.6% in the first two months of the year.

According to the sector report, sales in February were mainly concentrated in goods and services related to the tourism sector.

“In addition, in February there was a strong increase in Food prices with its maximum exponent in the dynamics of beef, with monthly increases that averaged 25%, which reduced the purchasing power for other products,” observed the CAME.

The retraction of consumption occurs in a scenario of very high inflation which, according to private projections, grew by 6.2% in February compared to January and 101.7% in interannual terms.

The contraction in consumption is also evident in credit card expenses, which, according to data released this Sunday by the private consultancy First Capital Group, they fell in real terms given high inflation.

According to this report, the volume of money in credit card operations barely grew 1.4% in February compared to the previous month and 82.6% in year-on-year terms, well below the inflation projected for the second month of the year. .

First Capital Group observed that the limits set by banks for financing expenses with cards are outdated, putting a ceiling on consumption.

“The acceleration of the inflationary rhythm makes it necessary to update credit limits more frequently to maintain the level of spending by cardholders. It is striking that the beginning of the school period, and the purchases that it causes, are not reflected in a more important growth of the balances”, said Guillermo Barbero, partner of First Capital Group.

Source: EFE

Source: Gestion

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