Consumption had the worst fall and recovery is delayed

In June, the consumption In Argentina, household consumption experienced a significant drop, the worst since the COVID-19 pandemic. According to data from the Argentine Chamber of Commerce and Services (CAC), household consumption fell by 9.8% compared to the same month of the previous year and by 3.3% compared to May 2024.

This decline reflects a worrying trend in the Argentine economy, which has seen its recovery delayed due to several economic and social factors. One of the main factors that has contributed to this drop in the consumption is the loss of purchasing power of households.

The devaluation in December 2023 deepened this situation, leading to a 21% decrease in the purchasing power of average nominal household income, which was estimated at $1,188,000 in June 2024.

This loss of purchasing power has forced families to adjust their expenses, prioritizing essential items and reducing the consumption in areas such as clothing, recreation and housing. Inflation has also played a crucial role in this scenario. In June 2024, inflation registered a slight increase, interrupting a deceleration trend that had lasted five consecutive months.

Consumption had the worst fall and recovery is delayed

The Consumer Price Index (CPI) of the National Institute of Statistics and Census (INDEC) showed a variation of 4.6% in June, compared to 4.2% in May, with a year-on-year increase of 271.5% and a cumulative increase of 79.8% in the first half of the year.

This rise in inflation has negatively affected the purchasing power of consumers, making the recovery of consumption even more difficult. Javier Milei’s government has focused its efforts on reducing inflation and gradually improving wages.

Consumption had the worst fall and recovery is delayed

Prices

However, this process of improvement has been slow and companies and analysts anticipate that the recovery of consumption will be a long process. The confidence of the people and the private sector in the government’s economic programme will be crucial to accelerating this recovery.

The fall in consumption not only affects households, but also the economy in general. consumption It represents more than 70% of Argentina’s Gross Domestic Product (GDP), so its decrease has a significant impact on the country’s economic growth.

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