Economic problems in Argentina awaken “supermarket tourism”

Uruguayans are crossing the border into Argentina to buy food and cheap fuel, as distortions between the two economies encourage residents of Uruguay to take advantage of the most favorable prices in the neighboring country.

The manager of a Uruguayan supermarket said sales were falling rapidly as her Uruguayan customers increasingly make day trips to neighboring Argentina in search of bargains.

“The issue of what is edible and cleanliness hit us hard”said Noelia Romero from the Uruguayan city of Fray Bentos, which shares a bridge with the Argentine city of Gualeguaychú.

Argentina is fighting inflation of more than 100% and a weak currency, which has lost about a quarter of its value against the dollar this year despite strict capital controls slowing its decline.

The parallel exchange rate widely used in Argentina, known as the dollar “blue”has tumbled further against most major currencies this year.

The current economic crisis is creating a dilemma for the border cities that Argentina shares with Bolivia, Chile and Uruguay because they cannot compete with the Argentine prices of shops often located within walking distance.

“Fuel there (in Uruguay) is 70 pesos (1.58 dollars) and here we pay 20 pesos (0.53 dollars), so we already have more than half the profit there, that is, like It helps us a lot more”said Robert de Lima, who had traveled less than 45 kilometers to Gualeguaychú.

In Uruguay, high levels of unemployment and bankruptcies have been reported in border cities, forcing the government to introduce economic measures in May to help protect merchants. These included tax breaks and discounts on gasoline and medicines.

Uruguayan President Luis Lacalle Pou has acknowledged there is a problem with prices so low in Argentina, with demands by regional governors that his government implement a temporary import tax on foreign goods transported across the border.

Abelardo Alzaibar owns a pharmacy in Fray Bentos and said that even with the incentives, the price disparity is creating problems for local businesses.

“Obviously that creates a tremendous problem in the survival of local commerce. Employees in unemployment insurance (unemployment insurance), businesses that close, business indebtedness and obviously this does not have an immediate cut in mind “Alzaibar said.

“We must continue to resist as much as possible”he concluded.

Source: Reuters