Argentina: New drop in consumption in August, especially in key sectors of the middle class

In August 2024, consumption declined again. It fell 1.8% compared to July accumulating a drop of 7.8% in the year-on-year comparison, according to the Consumption Indicator (IC) of the Argentine Chamber of Commerce and Services (CAC)

The Report notes that “during the first eight months of 2024, The IC shows a cumulative fall of 6.4%compared to the same period in 2023.” And that “Although inflation has stabilized over the past four months, Real income remains at low levels and consumption shows no signs of recovery.” The Report estimates that in September the increase in public transport and water fares will act against the recovery of consumption.

The following stand out in the decline in consumption:

The Report adds that “While the continued crawling peg indicates that inflation could stabilize relatively in 2024, the increase in rates Public transport and water for September could speed it up again. In this scenario, the evolution of the exchange rate and public service rates will be decisive in establishing the net impact that inflation will have on the real income of households and, therefore, on the level of consumption they can reach.”

The current inflation has a greater impact on the salaried and professional middle class, to which is added the reduction in income due to the payment of income tax, from which the vast majority was exempt.