Sales of basic goods such as food, medicine and gasoline dropped significantly in December compared with the previous year, reports have found. It came in a month during which newly-inaugurated President Javier Milei’s government devalued the peso by 54%.

Retail sales dropped by an average of 13.7% year-on-year in December, according to the Argentine Confederation of Medium-Sized Companies (CAME). Sales at food and drinks stores were down by a fifth (19.8%) in what is normally a strong month as households stock up for Christmas and New Year. That sector was followed by pharmacies (-19%) and hardware and construction materials stores (-14.2%).

CAME’s report, which focused on small and medium-sized stores, said that there was a “steep drop” because consumers, expecting the peso devaluation and price increases, “purchased a considerable number of products [in November] that are normally bought in December.”

Shop owners surveyed by CAME said the drop in sales was unexpected, linking it with price increases and shortages of certain products. “[Sales] were restricted to the bare minimum,” a hardware store owner from Santiago del Estero city told CAME. “If they don’t revive, we won’t be able to keep going.”

Cancellation of public works

Construction materials sales decreased by 17.4% year-on-year in December, according to the latest report by the construction association Grupo Construya. Their “Construya Index” showed a 14.8% drop compared to November.

“This is a consequence of the uncertainty associated with the change in the government, and is likely to go on during the summer,” Grupo Construya’s report said.

Two days after Milei was inaugurated, Economy Minister Luis Caputo announced that the government would not tender any new public works and would cancel projects whose construction had not yet started. He did not say for how long the freeze would last. It is part of a major government austerity package.

Construction business leaders surveyed by CAME attributed the drop in sales of construction materials to the cancellation of public works, “which affected the entire commercial chain,” said the report.

Fuel

Gasoline prices have skyrocketed in the past month. Oil companies increased fuel prices by 30% two days before former President Alberto Fernández left office on December 10, then by 37% three days after Milei was sworn in. Another increase came on January 3 (27%), bringing the total to 126% since the start of December.

After the two price jumps in December, sales dropped by 10% in some gasoline chains, according to specialist energy publication Econojournal.

Toys

In Argentina, kids receive gifts not only on Christmas but also on January 6, which is Día de Reyes, a celebration with Spanish roots. According to CAME, sales dropped 13.6% this year for the celebration, in which the Reyes Magos leave gifts at kids’ doorsteps.

“Purchases were limited to kids’ clothing and toys,” the confederation’s report noted. The average spend on these gifts was AR$28,468, around US$34 at the official exchange rate or US$25 at the MEP rate, 327% more than in January of 2023. “This means there were fewer sales, but at higher prices.”

The National Institute for Statistics and Census (INDEC, by its Spanish initials) will publish December’s monthly inflation rate on Thursday. On Sunday, Milei told Radio Mitre that “a 30% [inflation] would be a great number” despite it being “horrendous” because with Fernández’s government it would have been 45%. Milei said this would be “an extraordinary achievement” because they would be reducing inflation by a third.

“This is an inflationary disaster, but if [December’s inflation] is 30%, Caputo should be taken for a victory lap” in celebration, Milei said.

In November, the year-on-year inflation was 160.9%, and there was a monthly 12.8% price increase.