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The turbulence in Argentina triggers panic buying and price hikes

#turbulence #Argentina #triggers #panic #buying #price #hikes

A political crisis in inflation-stricken Argentina, sparked by the resignation of the economy minister, has spooked markets, sparking fears that led to panic buying and hasty price hikes as the informal exchange rate soared.

“It’s like going lion hunting every day,” Luis Sacco told AFP outside his electronics store in the capital, Buenos Aires.

Since Monday, prices have increased dramatically in shops and businesses across the country.

On Saturday, Economy Minister Martin Guzmán resigned after months of pressure within President Alberto Fernandez’s center-left governing coalition.

Guzman was the chief negotiator in Argentina’s $44 billion debt restructuring haggle with the International Monetary Fund.

But he became 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 faction within the coalition led to his resignation and replacement by Kirchner loyalist Silvina Batakis.

She is the one who now has to lead Argentina’s agricultural powerhouse through its long-standing economic crisis.

Inflation, which has surpassed 60 percent in the last 12 months, is hurting ordinary Argentines caught up in the political soap opera.

“It was the longest Sunday of my life,” said Sacco, an electronics store owner, who spent an anxious weekend “not knowing whether or not to open the shutters, (and) a Monday when he… thought a catastrophe.”

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

– ‘Prices are not determined by costs’ –

But amid the uncertainty and panic, sales did indeed skyrocket for many companies as consumers feared prices would soon rise.

That’s a big problem in a country that’s struggled with years of high inflation.

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

But “people also buy because they know that if they wait, the price will go up. It’s time to sell stocks.”

It increased its prices by 15 percent a few weeks ago, by another five percent this week, while now it has increased the prices of its imported goods by 30 percent.

Fernando Agote, who owns a hardware store, says things are calming down after initial panic buying despite minor price changes.

Conversely, many suppliers have suspended their sales and are waiting to see what happens to prices before taking new orders, lest they fall short.

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

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

A paint shop in the Floresta neighborhood increased prices by 20 percent without reducing sales volumes.

“Everything was sold,” said manager Leo. However, supplies were not replenished.

“Only one company delivered.”

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

After 20 years in business, Leo has lived 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 –

The change of government comes at a time when workers are receiving a biennial wage bonus, leaving them inundated with cash.

Still, “you have to be careful not to change more than what it is, lest you trigger an unnecessary snowball of inflation. We’ve had enough of that already,” says Alberto Sorrentino, 60, who runs a building materials company.

He expects the prices of “domestic products to rise between six and ten percent, and imports between ten and twenty percent”.

The largest price increases were in the food industry.

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

“People are still buying, but less.”

In the neighborhood of Villa Crespo, a shop selling natural products has a sign informing customers that prices have not increased.

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

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