The Economy Ministry established this Monday that the commercial agreement underpinning current price caps will remain in force until December 2023. The “Precios Justos” (Fair Prices) program, which was implemented in November, froze the value of 1,907 products and set a maximum monthly price rise of 4% for 30,000 other items until February 28, 2023.
While the prices themselves will only be fixed until February, the new framework will make it easier for the government and producers to renegotiate prices throughout 2023.
The policy, which was launched after a government agreement with 113 manufacturers and sellers, initially covered a basket of foods, drinks, personal hygiene and cleaning products that are sold in 2,500 stores, supermarkets and wholesalers across the country. This month, fuels were added to the program, and will be subject to the 4% monthly price increase limit.
Last week, clothes and 40 traditional Christmas foods and drinks, such as panettone, nougat, garrapiñadas (caramelized peanuts) and sparkling wine were added to the list. On Monday, common industrial consumables were also included. In exchange for the price freeze, the government promised to guarantee the companies access to US dollars for imports. The companies are also required to guarantee that the products are always available on supermarket shelves, a common Achilles heel in this kind of program.
Although Fair Prices will remain as a legal framework at least until December 2023, according to sources inside the Commerce Secretary, the prices of the basket of basic goods will end in February and will later be re-negotiated. Some others, like the deal on clothing, will remain in force until April. The source adds that the policy document extending the initiative – resolution 1077/2022 – is “generic” and allows future agreements with other sectors. He added that the government was waiting for a full evaluation of the program’s impact before reopening negotiations regarding the price caps that expire in February.
If companies can’t supply products due to factors beyond their control, they must notify the Domestic Market Policies Undersecretary within 72 hours. Companies which fail to respond to official requests for information will also be considered in violation of the agreement.
The government views the plan as a resounding success. Last Thursday, the National Institute for Statistics and Census (INDEC, by its Spanish initials) reported that November inflation was 4.9%, the lowest since March this year and 1.4 points less than the previous month.
Commerce Secretary Matías Tombolini said at the time that his office was seeing “a really important slowdown in foods and drinks” due to Fair Prices. However, annual inflation in November was 92.4%, the highest in 30 years.
Economy Minister Sergio Massa said the government hoped that monthly inflation would be around 3% by April, adding that he was “still not satisfied”. That would likely mean renegotiating the maximum monthly price increases, currently set at 4%, to ensure they remained below inflation.