BUENOS AIRES, Feb 20 2014 (IPS) - Argentine consumers have responded to calls on social networks to mobilise against price hikes that threaten the country’s major advances towards poverty reduction and greater social equality.
A consumer boycott has had encouraging results, according to some consumer associations and government spokespersons.
The results were not quantifiable, but the campaign not to make purchases for 24 hours on Feb. 7 in supermarkets, appliance stores and gas stations was supported by 280,000 people on internet and visibly emptied many establishments.
“I started to go to different places to check prices. There are enormous differences,” psychologist Ester Vallez told IPS. She said she paid 30 percent more for a key for a lock from one week to the next, something that “obviously affects other products, too.”
Consumer justice in short supply
Sandra Collado, president of Consumer Action (ADELCO), believes that consumer defence laws should be better enforced.
“A fundamental step is for the state to implement free justice administration for small claims involving small sums,” so that wronged consumers can have their complaints dealt with, she told IPS.
One example would be an overpriced domestic appliance that is worth less than what it would cost to take the complaint to court, she said.
ADELCO did not support the consumer boycott because it considers that these initiatives are only effective when they are targeted at products and companies identified in advance.
“Today nobody really knows whether the sales of some products were lower, and what the impact was on sales volumes of particular companies or brands,” she said.
“The government must control prices and we should all seek a strategy to exert pressure together,” Javier Sequeira, a maintenance worker who lives in La Matanza, in the west of Greater Buenos Aires, told IPS.
Sequeira’s wages are no longer enough to support his family. He is thinking of joining together with neighbours to buy food in bulk more cheaply at the Central Market.
“If we stop buying some products because they are too expensive, the factories will soon feel the difference. Many people use the dollar as an excuse to take unfair advantage,” said this father of two “with another on the way,” whose annual wage increase has evaporated because of inflation.
The consumer boycott is one of several initiatives called for in the media, including comparing prices, denouncing price increases and checking that products on the Precios Cuidados price watch list are available in stores.
The price watch list is the result of an agreement between the government of President Cristina Fernández and chains of suppliers and traders, to offer food drinks, cosmetics, cleaning, educational and construction products at accessible prices.
Mobilising against speculative prices emerged after the devaluation of the Argentine currency, the peso, which in January alone was devalued by more than 34 percent against the dollar, its largest fall since 2002, triggering indiscriminate price hikes.
In 2013, the official value of the peso fell by 25 percent against the dollar and the parallel peso by 47 percent, according to consulting firms.
“It’s time for all sectors to take their share of responsibility for things to keep working,” said President Fernández, criticising influential economic interests she blames for speculative attacks and capital flight.
Ernesto Mattos, an economist at the Centro de Investigación y Gestión de la Economía Solidaria (Economic Solidarity Research and Management Centre), told IPS that devaluation of the peso is an “excuse” to increase prices, speculate and reduce real salaries.
He said that between June and December 2013 companies selling food “had already increased prices by 200 percent,” even for many products that had no imported ingredients.
According to the National Institute of Statistics and Census, inflation in 2013 was 10.9 percent, whereas private consulting firms put it at 28.3 percent.
“At stake is not only speculation and workers’ wages, but the national project and the kind of country we want,” said Mattos.
The choice is between a country at the mercy of the big transnational corporations, or one that is capable of supplying its own basic needs and “joining forces” with the rest of the region “to make progress on social inclusion and reducing inequality,” he said.
Vallez said the government should “put more people on the street to control prices, and we as citizens should do our part, by not taking things lying down but reporting and not buying products that are overpriced.”
The government has responded with a battery of measures to counteract the results of devaluation and social discontent over its effects on prices.
As well as the Precios Cuidados price watch programme it has instituted new social programmes like Progresar (Progress), which provides a monthly allowance for unemployed or precariously employed young people aged 18 to 24 to start or complete their studies.
According to the Economic Commission for Latin America and the Caribbean (ECLAC), Argentina has the lowest poverty rate in the region (4.3 percent) and the second lowest extreme poverty rate (1.7 percent), after Uruguay.
In December, ECLAC ranked Argentina as one of the countries in the region that most decreased inequality during the period 2008-2012.
But the loss of value of salaries and purchasing power could reverse those achievements.
“The main source of the reduction of inequality over the past decade was the increase in the component of non-labour income (like subsidies and other assistance programmes) in the poorest households, but not improvement in work-related income in the same households,” said Agustín Salvia, the head of the Programa Cambio Estructural (Structural Change Programme) at the “Gino Germani” Research Institute of the University of Buenos Aires.
The inflationary spiral will tend to increase poverty, as well as inequality, he told IPS.
This is “precisely because of the impoverishment of wage-earners and non-wage-earners who are least protected by labour regulations,” said Salvia, a researcher for the National Scientific and Technical Research Council (CONICET).
In spite of government moves to neutralise the impact, it will not be able to “prevent a negative effect on workers in informal sectors” and also on pensioners, he said.
“The government must take strong measures to prevent inflation from creating a wider distribution of incomes, by continuing and deepening the existing policies for these social sectors,” Jimena Valdez, an economist and political scientist, told IPS.
In her view, “this entire situation would be exacerbated if there is an inflationary spiral, which is why it is in the primary interests of the government that this should not happen.”
To prevent it, Valdez said, the government could call for a dialogue with the business community and trade unions to discuss labour policies and wage increases. It should also increase the payments made by the social programmes in line with inflation.
Salvia said it is “very important to raise awareness and mobilise the public to put pressure on price setters so that there are no excesses.”
However, he pointed out, price movements “will be determined, fundamentally, by factors like the money supply, the level of demand (which is dropping), devaluation and inflationary expectations.”
Poverty and indigence in Argentina in the last quarter of 2013 again increased and reached 27,5% of the population and 17.8% of households, according to the latest report from the Catholic University Social Debt Observatory, UCA.
The release comes in the midst of a controversy since the Argentine government has refused to make public its latest estimates on poverty arguing that a change in methodology is delaying the indexes.
Indigence was recorded at 3.2% for households and for individuals climbed from 4.9% to 5.5%.
According to the Social Debt Observatory, poverty and indigence percentages effectively dropped in Argentina from 2010 to 2011, but again climbed in 2011, 2012, and 2013.
“The most conservative estimates indicate that poverty dropped significantly between 2010 and 201, from 17.6% to 14.3% of households and from 27.6% to 22.9% for individuals, both rates climbed in 2012 to 15.5% and 24.5% and to 16.5% and 25.6%, respectively”.
However if the basic basket used to measure poverty is considered at its maximum value, “rates both for households and individuals tend to be higher” says UCA.
In this last case, household poverty between 2010 and 2011 drops from 19% to 15.5% but then in 2012 and 2013 is up to 16.9% and 17.8%. This evolution repeats itself with individuals: it first drops from 29.5% to 24.7% between 2010 and 2011, and then climbs to 26.4% in 2012 and 27.5% in 2013“.
However there are more dramatic figures referred to the second half of last year which indicate that there are 15.4 million poor people in Argentina, or 36.5% of the population. These figures have been elaborated by the Institute of Public Thinking and Policies, IPPP, which is made up of staff sacked by the Kirchner couple from Argentina's controversial stats' office Indec.
IPPP also supports a paper published by two economists, Claudio Lozano and Tomás Raffo who argue that in Argentina there are five million people who are 'hungry' or below the indigence line; this is equivalent to 12.1% of the 40 million population.
In 2007 the professional staff from Indec was removed by then president Nestor Kirchner and replaced by political cronies who tailor-made stats to help 'keep inflation down' and GDP growth moderate, so Argentina would limit payments on its sovereign bonds tied to the economy's expansion.
The latest official Indec index, from the first semester of 2013 indicated that poverty in Argentina stood at 4.7%.
IPPP also shows that between 2012 and 2013, the number of poor in Argentina increased by 1.8 million, from 32.7% to 36.5%, while indigence was estimated at 6.3%.
Lozano and Raffo also elaborated a ”hunger and poverty“ chart which shows the province of Chaco as the worst, with 61.6% poverty and 30.4% indigence. Cabinet chief Jorge Capitanish was the elected governor of Chaco before invited to his new role in Buenos Aires.
The districts with the least poverty are the City of Buenos Aires, 13.4%; Tierra del Fuego, 14.9% and the Kirchner turf of Santa Cruz, 22.4%.
The IPPP report also shows that between 2007 and 2013, prices in Argentina climbed 337.6%, four times the official Indec index, with Food and Beverage increasing 597%.
”According to Indec an individual in Argentina can feed adequately with 8.50 Pesos (a dollar at the official rate) per day and a family of four with 26 Pesos (3,40 dollars). But our estimate is 37 Pesos (4.50 dollars) for an individual and 115 Pesos (15 dollars) for a family”, concludes the report.
Economists still warn that the level could be more than 30 percent as inflation surges.
World Bulletin / News Desk
Argentina’s government said Friday that poverty levels have come down sharply in recent years even as concerns swell that more people are going hungry as inflation soars.
The latest official data, compiled by the state statistics agency Indec, shows that the poverty rate fell to 4.7 percent in the first half of 2013 from more than 50 percent in the wake of a 2001-02 economic crisis.
Yet questions of what’s happened in recent months rose this week after Indec declined to publish the latest data, for the second half of 2013, as scheduled Wednesday.
“There is no doubt that the reduction of poverty and indigence has been drastic” since the ruling party came to power in 2003, Jorge Capitanich, the president’s chief of staff, said in a televised press conference.
He said that six million jobs have been created since then, which coupled with rising wages has allowed more people to improve their living standards.
Capitanich said the failure to release the most recent data was a response to “methodological problems” and difficulties in melding old measurement techniques with new ones associated with a national consumer price index launched in February.
Indec has not published the data on baskets of basic goods since January, numbers that are used to calculate poverty and indigence every month.
But this has again raised concerns that the government could be doctoring economic data.
Government data has been under the spotlight since 2007 when officials first started tampering with the numbers to show lower inflation. Indec has shown steady inflation of 10 percent annualized since 2007, while private estimates say it has averaged 20-25 percent a year over the same period and could surpass 35 percent this year.
The low numbers brought questions from the International Monetary Fund, which threatened to throw Argentina out of the group unless it cleaned up its data reporting.
Faced with this threat, the government produced a new national CPI in February showing inflation more in line with private estimates.
Keeping reliable and true data is key for Argentina to mend ties with the IMF. It is also a critical step if it is to return to borrowing on global financial markets for the first time since a 2001 default on $100 billion in bonds.
The country still is in default on about $20 billion, of which $10 billion is owed to the Paris Club. That group of creditor nations, which includes Germany, the U.S. and U.K., won’t negotiate a repayment plan unless the IMF mediates. In turn, the Washington D.C.-based lender won’t mediate until Argentina starts to produce credible economic data.
“The challenge of rebuilding confidence in official economic data is proving a lot harder than the government thought,” said Luciano Cohan, chief economist at Elpysis, an economic consultancy in Buenos Aires.
Earlier this month, the Institute of Ideas and Public Policy, a think-tank run by an opposition lawmaker and former Indec statisticians who left the department after the data tampering started, said that the poverty level reached 36.5 percent in the second half of 2013, up from 32.7 percent in the second half of 2012.
That is far more than Indec’s estimate of 4.7 percent in the first half of 2013 and 5.4 percent in 2012.
“The government wants to hide the fact that poverty is higher today than in the 1990s,” when it averaged 20 percent, Daniel Artana, an economist at the Latin American Economic Research Foundation in Buenos Aires, said on Radio Mitre.
Fernandez de Kirchner has often blamed the neo-liberal economic policies of the 1990s for the collapse of the economy in 2001. The 1990s brought a surge in private investment as the government sold off public assets, yet unemployment and poverty levels rose as companies cut payrolls previously tied to the state.
The president’s administration has pursued welfare policies aimed at helping lift the lower class out of poverty and into the mainstream economy.
But if the poverty rate is 30 percent, as Artana estimates, he said this is a sign that the government’s policies of defending the poor “have been a big failure.”
“THE final lie” was what some Argentines called the December 2013 inflation figures published by their country’s statistics agency (INDEC). After the IMF threatened to censure the country for tampering with inflation data, in January INDEC rolled out a new consumer price index (CPINu). At last, the numbers would be more accurate.
Or so people thought. The CPINu’s August inflation figure of 1.3% is less than half the 2.65% of the CPI Congreso, a compilation of private estimates gathered by opposition members of Congress. Since the CPINu began, its figures have been on average 0.94% below those reported by Congress. This is less than the gap that existed between the old price index and the CPICongreso, which differed by an average of 1.45% a month in 2013. But it is significant.
“INDEC has returned to tinkering with its numbers,” says Miguel Kiguel of EconViews, a consultancy. Graciela Bevacqua, who directed INDEC until the government started manipulating the numbers in 2007, is harsher. “It has become clear that it was never the government’s intention to improve the credibility, clarity or transparency of its statistics,” she says.
Ms Bevacqua points out that INDEC has also stopped publishing poverty statistics, the calculation of which depends in part on inflation numbers. The statistics agency claims this is due to the difficulty of bridging the new and old consumer-price indexes. An unconvincing press release posted on the INDEC website in April reads: “As it is known, in January INDEC modified its methodology for measuring its price index, starting to measure prices in the entire country instead of just in Grand Buenos Aires as had been done before… Yesterday the publication of the poverty and indigence data, that the statistics institute has worked on since 1993, was discontinued on account of severe methodological problems.”
The real motive is surely political. Despite a fall in inflation over the course of the year, and despite INDEC’s lower numbers compared with private estimates, Argentina’s 2014 inflation rate is bound to be far higher than the 10.9% INDEC announced for last year. Between January and August prices had already risen by 18.2%, according to the CPINu; Elypsis, a consultancy, is forecasting an annual rate of 38.5%. Argentine President Cristina Fernández de Kirchner sells herself as a champion of the poor, and a spike in poverty figures during her last year in power is not the legacy she wants. Transparency can wait.