Consumption fell by 3.8% year-on-year in March

In March 2024, the Consumption Indicator (CI) of the Argentine Chamber of Commerce and Services (CAC) showed a decline of 3.8% in the year-on-year comparison (YoY). Although there was a seasonally adjusted increase of 0.8% compared to February (i.e. discounting the usual seasonal effects of consumption throughout the year), consumption continues to fall hand in hand with the loss of the purchasing power of real wages. The indicator, which reflects the evolution of household consumption of final goods and services on a monthly basis, estimates an average nominal income of $973,000 in the month of March 2024. That income implies a drop of 17% in real terms. The Chamber analysed the current situation and explained that “the significant increases in the prices of regulated goods, especially in sectors such as education and public service tariffs such as electricity, (…) resulted in a continued decline in households’ real income, eroding their purchasing power.” And they added: “In the process of ordering relative prices, consumption is being the adjustment variable on the part of families. The implementation of an income policy that seeks to recompose consumption, but without accelerating inflation again, will be a difficult task that the national government will have ahead of it.” Consumption item by itemWhen analyzing the performance of some items in particular, a generalized dynamic of year-on-year decrease is observed compared to the values of March 2023.The clothing and footwear category showed an estimated decrease of 11.2% YoY in the third month of the year, with a negative contribution of 0.6% to the 3.8% YoY decline in the CI. This is explained by the large drop in household income and the postponement of consumption that is not essential for daily life. On the other hand, the transport and vehicles chapter showed an estimated decline of 4% YoY in March, contributing negatively by 0.5% to the year-on-year variation of the CI. The decrease is explained by a sharp drop in car registrations and a slight increase in the price of gasoline. Recreation and culture showed a decrease of 14.5% YoY in March (with a negative contribution of 0.9 p.p. to the CI). This is explained by the same reasons as the apparel and footwear segment: the fall in real income reduced purchasing power and postponed access to leisure-related goods and services. As for housing, rents and public services, it showed an estimated decline of 9.9% YoY in March of this year, which is mainly explained by the decrease in disposable income and the large increase in electricity rates. With respect to the rest of the items, they experienced an estimated contraction of 0.2% YoY in March (and an incidence of 0.1 p.p.), positioning themselves at levels 6.3% above pre-pandemic levels.

Original source in Spanish