Unbridled spending, tactics and strategy in the face of inflation

Packed restaurants, long lines outside the theatre, concerts that sell out in hours – Argentines with purchasing power are responding with a frenzy of consumption in the face of soaring inflation, which totals 114 percent in the last 12 months.

“We are tired of economic problems. We are so used to living so many years without stability that people just want to enjoy themselves,” Santiago Basavilbaso, a 25-year-old chef, said in an interview.

“Today life is a little more precarious. I’ve had to change my tastes, modify my purchases towards cheaper brands, but without giving up enjoying myself. I try to adapt to the economy,” he added, as he scoured prices for the best deals on fruit and vegetables for his business.

Argentina is among the countries with the highest inflation rate in the world. Rising prices have been a chronic malady of the national economy, but it is now spiking at its highest level in 30 years, with rises of around eight percent a month that choke the poorest. Around forty percent of the population lives in poverty.

“The consumer strategies of today are passed down by family, they are behaviours that our parents and grandparents used all their lives,” says economist Martín Kalos.

“Buying a house or a car is something unattainable. So what do you do [with your money]? You spend it,” explains economic analyst Salvador Di Stefano.

In Argentina, credit is now limited to low-level consumption and has practically disappeared for major expenses, such as buying a house or even a new car.

Interest rates, which range from 100 percent to 150 percent per annum, scare off those who would aspire to a mortgage loan.

Although at scale, spending has been boosted at all levels of society. “Those who can’t afford a holiday go to a concert, those who can’t afford a concert go to eat a pizza and drink a beer,” said Di Stefano.

OFFERS AND INSTALMENTS

Prices are rising so fast that any purchase made with a credit card, if paid in full by the due date, means some savings.

“You have to stick to the budget you have. Oil, salt, bread or coffee go up in price almost weekly,” said Adrián Álvarez, a 63-year-old meditation instructor, who sometimes makes ends meet and sometimes doesn’t.

“When I can’t make ends meet, I use the credit card. When I don’t have enough, I use my credit card. I play with a 30 or 35-day head start. I take the goods at one price and pay later,” he explains.

At the supermarket where Álvarez usually shops, the shelves are full with signs of all kinds of promotions. Taking two of the same products can get you a 70 seventy discount on the price of the second one, while using a debit card from a specific bank on a specific day of the week can get a 30-percent discount on the whole shop.

Similar advertisements are displayed in the windows of clothing and household appliance stores, which also offer to financing in 12 monthly instalments for large purchases.

IMPOSSIBLE TO SAVE

“Inflation is an incentive to spend faster, because saving is more difficult,” said Kalos. “Wages are being spent faster and faster, money is less and less in the hands of those who earn it because it loses value.

“There is a wide dispersion of prices. It is difficult to know whether what you are buying is cheap or expensive because the reference is constantly lost,” he added.

In this swamp of prices and offers, Ricardo Nasio, the president of the Proconsumer consumer protection association, recommends comparing before committing.

“It is important to have a consumer culture, to ask all prices before buying. It is very good to buy non-perishable food among several families, or to stockpile to protect oneself from increases,” he said.