Argentina's government has confirmed a sweeping voluntary agreement with retailers and business leaders that will see the cost of more than 1,200 household products frozen in a massive pre-election price-control freeze.
The voluntary agreement with the private sector, which will last 90 days, is the Alberto Fernández administration's latest attempt to tackle runaway inflation and win back voters ahead of crucial midterm legislative elections in November. Prices increased by 37 percent in just the first nine months of the year, the INDEC national statistics bureau confirmed on Thursday.
Speaking to local media, Argentina’s new Domestic Trade Secretary Roberto Feletti revealed that items would have prices frozen until January 7 next year.
"These 1,247 products with frozen prices will provide an anchor to stabilise inflation," he told the El Destape radio station. “The fundamental thing is to stop the ball [curb inflation] and guarantee a quarter of high consumption."
Argentina has a price control programme known as Precios Cuidados, which currently has more than 700 products in supermarkets whose prices can marginally increase each quarter. At a meeting in the capital on Wednesday, Feletti told business leaders from top food firms and retailers that the government wanted companies to extend the scheme, while adding other products.
The government later confirmed that the price control agreement, which includes items covered by Precios Cuidados, involves holding prices at their values as of October 1. Among those participating are producers, suppliers, supermarkets, marketing chains, wholesalers and retailers.
“We need to hit pause to prevent food price hikes from eroding salaries,” Feletti said in a government statement. “The basic food basket in December 2019 was nine percent of the average salary and in the last measurement it was 11 percent.”
Feletti added that the “response” from business leaders had been “favourable" and said that retailers should not see the move as “a negative process.”
“If they analyse it, there is no loss of profitability, but if there is any, it is compensated by quality,” he argued.
The official spoke to about 100 business leaders and advocates at Wednesday’s meeting, including representatives from Danone SA, Néstle SA, Arcor SAIC and Molinos Río de la Plata SA, a food industry official who attended revealed to Bloomberg.
Among the products affected are food items, cleaning products and materials and personal hygiene goods.
President Fernández and his ruling Frente de Todos coalition are looking to recover support after a PASO primary vote held in September indicated it will likely lose Congress seats in midterm elections on November 14. The government is likely to struggle to maintain its majority in the Senate, with two years still to run of its mandate.
This latest move comes amid a wave of repeated protests from left-wing groups and social organisations calling for greater assistance and food subsidies to help the nation’s poorest during the ongoing economic crisis. Poverty now reaches 40 percent of the population, according to official data.
The government recently announced a 16-percent increase for the minimum wage, lifting it to 33,000 pesos a month (approximately US$317) – less than half the value of the basic food basket for a typical family of four, according to INDEC.
Officials also confirmed an additional payment in October for those receiving family allowance payments, set to benefit close to two million wage earners in registered positions.