Guzmán adds support to combat inflation: what the new price control will be like without freezing

After having previously agreed on the guidelines of the official speech before those summoned to the lunch, the ministers of Economy, Martín Guzmán, and Productive Development, Matías Kulfas ; the head of the Central Bank, Miguel Pesce, and the Secretary of Domestic Trade, Roberto Feletti, spoke this Tuesday with a select group of businessmen from the food sector during an outdoor lunch that took place on the terrace of the Palacio de Hacienda. The agenda revolved around the agreement that the Government is finalizing with the International Monetary Fund (IMF) and the price policy that will be used this year to try to contain inflation. The meeting, which began at 1:30 p.m. and lasted until around 4:00 p.m., was attended by Laura Barnator (Unilever); Gabriela Bardin (Procter); Agustin Llanos (Mills); Abelardo Gudiño (Coca Cola); Adrián Kaufman Brea (Arcor); Gonzalo Fagioli (Quilmes) and Maximiliano Lapidus (Mastellone). Everyone listened to how Minister Guzmán outlined the behavior of the economy over the last two years, affected by the difficulties generated by the Covid-19 pandemic, and anticipated that this year improvements will be observed in various sectors. The official spoke of “strong reactivation“, with a positive evolution of the product that in 2021 will have grown around 10%, with a recovery of employment, investment and exports. In addition, emphasis was placed on complementing a comprehensive macroeconomic scheme to attack the inflationary problem with price and income policies, which include price agreements between the public sector and the private sector.

Without giving further details, the head of the Economy portfolio also referred to the talks with the IMF, assuring that they are advanced but acknowledging that they are not yet closed. He also told them that the Government will take the issue to the National Congress so that it can be debated in both chambers and admitted to the existence of a chapter linked to prices and inflation from which it is possible to understand the importance that the Government wanted to give to this lunch which, moreover, had already been agreed on last week as a step prior to the launch of the 2022 version of Care Prices. The official intention is to show the Fund authorities that in this sense it has the backing and commitment of the businessmen to support the battle against inflation which, unlike in previous years, will put aside the policies of permanent freezing for more flexible regulations. The evidence on the private accompaniment put forward by Guzmán and the rest of the officials present was based on the fact that, despite having operated with a pandemic scenario, rising costs and price clamps, there was no shortage of food and beverages, as Feletti himself recognized it.

Consensus and cooperation

The Secretary of Internal Trade recognized the “cooperative and constructive attitude” of the companies that, for their part, valued the importance of the agreements of prices to help coordinate expectations that allow attacking the element of persistence in the inflationary process in a way that is consistent with the rest of the macroeconomic policies. In the same way, Minister Kulfas, under whose orbit Feletti is, mentioned the joint policies that will be taken with Economy to “reduce high inflationary levels with a monetary and fiscal macroeconomic plan that provides predictability and collaborating with agreement on prices and generating protected baskets such as the Care Prices that we want to be much more present throughout the country, to take care of household income”. According to the Télam agency, Minister Kulfas also warned that in-depth analyzes of the profitability scenarios of the companies will be carried out, as he understands that “it is heterogeneous and without patterns common to the entire food industry.” The truth is that the Government got the photo it was looking for: that of business support for the new regulation scheme for increases starting from the 2022 version of Care Prices, which will be presented in society next Friday, January 7.

Minister Kulfas warned that in-depth analysis of the profitability scenarios of the companies will be carried out,

The new agreement contemplates a basket of more than 1,350 mass consumption products with quarterly updates and which will put end to freezes. In fact, some companies hope that the first price list will be made official with some increases, taking into account that a large number of products have kept their values ​​intact for 90 days. That is, with prices frozen since last July, when Feletti did not authorize the increases approved by his predecessor, Paula Español. To decompress the talks, the official could admit some adjustments but not greater than 6% for the first quarter of this 2022 and gradually. What is not discussed is the continuity of the scheme for another 12 months, taking into account that for the head of the Ministry of Internal Trade, the price freeze “met its objective, which is to ensure a basket that has to do with consumption of the average Argentine”. Another change is that Care Prices 2022 can be sold in all channels and not only in large supermarket chains and wholesalers , in addition to having reviews quarterly prices and monthly corrections. Exceptional cases that may arise within the three-month period will also be considered, when the specific situation warrants it. To this is added the possibility of substituting imports for local products, a claim by national manufacturers due to the rise in the international price of inputs and raw materials. In this sense, Feletti promised official help for companies that undertake investment projects “to interact with the areas of the State that are necessary.”