"Stop 1+1 Discounts at Marts"... Controversy Over Argentine Government's Price Control Method

"1+1 Event Not Included in Price Index"
Argentina's Concern Over 254% Inflation Rate

[Image source=Reuters Yonhap News]

The Argentine Minister of Economy has sparked controversy by demanding that retail industry leaders stop discount events like '1+1' promotions at large supermarkets and instead lower the actual prices of goods. This move marks a reversal by the government, which had initially promised to abandon its coercive price control policies but is now intervening in the market again. Academics have also raised counterarguments, stating that whether supermarkets hold discount events does not significantly affect actual inflation, thereby challenging the economic solutions proposed by the government.

According to Argentine local media Infobae on the 11th (local time), Luis Caputo, Argentina's Minister of Economy, met with heads of major retail companies and said, "Instead of holding bundled discount events like '1+1' or 70% off the second product, they should lower the base prices of goods and sell them at those prices." He added, "Inflation has just started to slow down, but these discount events are not captured in the inflation index, so the inflation index has not dropped significantly."

Caputo’s remarks have stirred controversy as they directly contradict President Milei’s pledge to abandon price control policies and manage inflation according to market principles. Since taking office in December last year, President Milei has scrapped the so-called 'fair price' program, which artificially suppressed prices of essential goods under the previous administration, and has also devalued the national currency by more than 50%.

The reason the Milei administration is reintroducing price control measures despite its initial promises is believed to be due to persistently high inflation. As of January, Argentina’s annual inflation rate reached 254.6%, setting a world record.

However, within Argentina’s economic community, there is significant opposition to the government’s push to curb retailers’ discount events and force price reductions, arguing that such measures will not effectively lower inflation. The National Institute of Statistics and Censuses (INDEC) of Argentina also countered Caputo’s remarks by stating, "Discounted products are reflected in the inflation index if certain conditions are met during market surveys."

Economist Gabriel Caama?o told Infobae in an interview, "Discount events at supermarkets have always existed, and it is inaccurate to say they are not reflected in the inflation index." He further pointed out, "Minister Caputo announced last month that the monthly inflation rate would be near 10%, but in reality, it was close to 15%, so it seems he is looking for an explanation."

This content was produced with the assistance of AI translation services.