In May 2023 , the Consumption Indicator (CI) of the Argentine Chamber of Commerce and Services (CAC) showed a seasonally adjusted stagnation compared to April (that is, discounting the usual seasonal effects of consumption throughout the year) and an advance of just 1.2% in the year-on-year comparison (yoy).
This new indicator developed by the CAC reflects the evolution of household consumption in final goods and services on a monthly basis, expanding and complementing the information contributions made by the Chamber to monitor trade and services, and economic activity.
In this way, the CI accumulates a growth of 3.8% yoy in the first five months of the year , although everything indicates that consumption will continue to lose dynamism in the coming months. In fact, starting in January, a downward trend is observed in the interannual growth rates exhibited by the CI, going from an increase of 6.1% yoy in the first month of 2023 to the current 1.2% yoy (with seasonally adjusted stagnation). ).
This phenomenon occurs in a context of severe macroeconomic restrictions and weaknesses that strongly condition and restrict the performance of the Argentine economy, and that, moreover, continue the trend of accentuating in recent times. As a result, household disposable income turned negative year-on-year in the last quarter of 2022 and since then it has not only remained in the red, but has also deepened its decline. In fact, it is estimated that in May this would already be in the order of double digits due to the inflationary acceleration of the last few months, which increases its damaging power in labor markets with high informality such as the Argentine one.
At the same time, the complex situation of public accounts, combined with the guidelines and goals agreed with the IMF, restricts the possibilities of assistance packages that seek to sustain and shore up the pockets of Argentine households , even in an election year like 2023. To this Added to this is the difficulty of a highly inflationary environment that limits the tools to encourage consumption if the acceleration of prices is to be kept limited. To illustrate this point, and without making an evaluative opinion in this regard, during the last month no measure with a direct positive impact on the purchasing power of families was announced, even though a category as relevant as food and non-alcoholic beverages is above headline inflationin the interannual comparison (117.9% and 114.2% in May, respectively).
When analyzing the performance of some items in particular, a shared dynamic of deceleration in year-on-year growth is observed starting in the second half of 2022, along with negative signs in some categories .
The clothing and footwear category showed an estimated drop of 17.8% yoy in May (with a negative contribution of 1.2 percentage points —pp— to the increase of 1.2% yoy of the CI), framed in a process of contraction started in October 2022 (in line with the evolution of the purchasing power of households), accompanied by a relative increase in the prices of the sector in the year-on-year comparison (+4.9%). In this way, the consumption of the category was more than 12% below the levels in force prior to the health disruption.
On the other hand, the chapter on transportation and vehicles showed an estimated growth of 3.2% yoy . in May (with an incidence of 0.4 pp in the year-on-year change in the CI), with car and motorcycle registrations advancing only 4.5% yoy and 1.1% yoy respectively. At the same time, the affected purchasing power of consumers, together with the shortage of foreign currency and the restrictions to access imported goods, has led to a rearrangement of the sales mix. Since mid-2020, a growing trend has begun in terms of national cars, reaching around 65% of total patents in recent months, when in 2019 they represented only 30%.
Recreation and culture appears to have left double-digit growth rates behind in response to a late lifting of restrictions and is estimated to have expanded by 6.9% yoy in May (contributing 0.4 pp to weak growth). of the CI).
Regarding the section on housing, rents and public services , this showed an estimated drop of 9.1% yoy in the fifth month of the year , where a 13% yoy reduction in residential electricity consumption stands out, probably largely explained due to the tariff readjustment process that began in 2022 and continues to this day, with the most recent increases seen in distribution and energy prices in April and May, respectively.
With respect to the rest of the items, these experienced an estimated growth of 5.9% yoy in May (and an incidence of 3.3 pp), positioning themselves at levels 5% above 2019.