Pressure from businesspeople on Milei is a sign of social upheaval in Argentina

Argentine businesspeople from the food and beverage and consumer goods segments met, this Wednesday (6), with the country’s Economy Minister, Luis Caputo, to express concern about the sharp drop in retail sales since the beginning of this year.

In addition to an 8% drop in sales in supermarkets, around 61% of companies in Argentina said they had reduced their production and 69% said they had suffered a drop in sales.

The enormous spike in the prices of products and services in the neighboring country is due to the arrival of President Javier Milei at Casa Rosada and the implementation of austere and liberalizing policies. An avowed anarcho-capitalist, Milei declared war on the State in favor of the free market and the strengthening of the private sector.

However, it seems that the main mass consumption companies have turned on the red alert for the loss of the population’s purchasing power generated by the total lack of control of inflation. In November, former president Alberto Fernández’s last month in government, inflation reached 12.5%, but soared to 25.5% in December and 20.6% in January after Milei took office, the highest monthly increases since 1991.

In total, 17 representatives met with Caputo and the Secretary of Commerce, Pablo Lavigne, at the Palácio da Fazenda. Multinationals from the consumer goods sector such as Johnson & Johnson,

Loreal, Unilever and Procter & Gamble and food, such as Quickfood SA, Arcor, Danone, Coca Cola and Nestlé.

Other national companies also participated in the meeting: Mondelez, Mastellone, Rio de la Plata Mills, Cañuelas Mills, Beer Industrial Company, Quilmes, Establishment Las Marías and Las Tres Niñas.

“Basically he (Caputo, economy minister) listened to the sectors. We express general concern about the sharp drop in sales. He asked us for clarity on price dynamics, as in the case of promotions and discounts”, said one of the sources interviewed by Infobae.

The meeting takes place the week after the Argentine government celebrated the economy’s first primary surplus in the last 12 years. The result is due to the federal government cutting subsidies and assistance to the poorest, part of the far-right leader’s chainsaw plan.

While the government contains spending and preaches against what it calls “castes”, the country’s population has been succumbing to poverty. In January, mass packaged consumption suffered a retraction of 3.8% compared to the same month in 2023, according to consultancy Scentia. The survey recorded that sales in supermarkets fell 8% in the same period.

The consultancy highlights the possibility that changes in habits due to inflation have intensified during the spike in prices. The speed of the fall in the purchasing power of salaries was so great that the deterioration in purchasing power reached 20% in just two months, according to the Labor secretariat.

Even workers with “stable” wages lost purchasing power, even with more regular salary adjustments.

The Ripte index, which measures the nominal variation in salaries of this group of workers who have had job stability in the last year, showed that in February the income of these families rose 14.7%, almost six percentage points behind the inflationary pace of that month.

“It is likely that habits that we have already seen will also intensify, with more frequent trips to the markets, but with fewer products per purchase, so that one can be more careful with spending in each act of purchase”, says Scentia.

In the coming months, it is possible that a slow disinflation process will begin, caused by low household consumption. In this context of falling consumption, companies have already signaled that they will begin to review their prices so as not to lose any more sales and avoid further interruption of activity.