Argentina unrest triggers panic buying and price hikes » Capital News


Buenos Aires (AFP), July 8 – An inflation-ridden political crisis in Argentina that was triggered by the resignation of the economy minister spooked markets and generated fears leading to panic buying and precipitous price hikes, as the informal exchange rate skyrockets.

“Every day is like going to hunt a lion,” Luis Sacco told AFP outside his electronics store in the capital Buenos Aires.

Since Monday, prices have risen significantly in stores and businesses across the country.

On Saturday, Economy Minister Martin Guzman resigned after months of pressure from President Alberto Fernandez’s center-left Frente de Todos (All People’s Front) government coalition.

Guzman was the chief negotiator in Argentina’s haggling with the International Monetary Fund to restructure a $44 billion debt.

But he was collateral damage in a power struggle between Fernandez and his vice president, former president Cristina Kirchner.

Opposition to Guzman’s fiscal policies from the former president’s influential coalition faction led him to step down and be replaced by Kirchner loyalist Silvina Batakis.

It is she who must now lead the Argentine agricultural power through its economic crisis which has lasted for years.

Inflation, which has exceeded 60% in the past 12 months, is hurting ordinary Argentines, who have been gripped by the political soap opera.

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“It was the longest Sunday of my life,” said Sacco, the owner of an electronics store who spent an anxious weekend “not knowing whether or not to raise the shutters, (and) a Monday thinking about disaster”.

The black market peso briefly fell from 239 to the US dollar to 280 on Monday before stabilizing at 250. The official exchange rate is 132.

– “Prices not set by costs” –

But amid the uncertainty and panic, sales have actually soared for many companies as consumers fear prices will soon rise.

This is a major concern in a country struggling with years of high inflation.

“There was no earthquake. There are sales, more than ever,” Sacco said.

But “people also buy because they know that if they wait, the price will go up. Now is the time to sell stocks.

Inflation, which has exceeded 60% in the past 12 months, is hurting ordinary Argentines, who have been gripped by the political soap opera © AFP/Luis ROBAYO

It raised its prices by 15% a few weeks ago, with another increase of 5% this week, while it has now raised the prices of its imported products by 30%.

Hardware store owner Fernando Agote says “things are calming down” after some initial panic buying despite little change in prices.

But conversely, many suppliers have suspended sales, waiting to see what will happen to prices before taking new orders, so as not to be harmed.

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“There was a lot of anxiety, a lot of speculation. Nobody knows where the real prices are, they are not set by costs,” Agote said.

Fortunately for him, only one of his suppliers suspended sales on Monday.

In a paint shop in the Floresta district, prices rose 20% without a drop in sales volume.

“Everything has been sold out,” manager Leo said. However, supplies were not replenished.

“Only one company delivered.”

Leo expects suppliers to “change all their prices and payment terms next week”.

After 20 years in the business, Leo has gone through several economic crises in Argentina.

“It’s unusual because people have money, they’re consuming, these days we’re selling like crazy, online orders have exploded,” he added.

– Time for caution –

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The change in government comes at a time when workers receive a bi-annual wage bonus, which leaves them with cash.

Even so, “you have to be careful not to change things more than they are so you don’t set off a snowball of unnecessary inflation. We have had enough already,” said Alberto Sorrentino, 60, who runs a building materials company.

The largest price increases have been in the food industry, according to consumers © AFP/Luis ROBAYO

He expects the prices of “domestic products to increase between 6 and 10%, and imports between 10 and 20%”.

The largest price increases took place in the food industry.

“What comes from abroad like bananas, papayas and melon has increased by 30% since Monday,” said John Quinteros, who runs a fruit and vegetable store in Floresta.

“People are still buying, but less.”

In the Villa Crespo neighborhood, a store selling natural products has a sign informing customers that it has not raised prices.

“We decided to keep them as long as possible,” said Liliana de los Santos, admitting “it’s a risk”.

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