Home » Consumption falls due to the recession but confidence in government measures continues to rise

Consumption falls due to the recession but confidence in government measures continues to rise

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Consumption falls due to the recession but confidence in government measures continues to rise

Pese a la consumption drop product of the strong recession, based on Javier Milei’s political decision to try to combat inflation with control of demand and the liquefaction of the monetary base, made up of nothing less than salaries, pensions and family income, Consumer confidence in economic measures is sustained.

As reported by the Finance Research Center from Torcuato Di Tella Universitytogether with the consulting firm Polyarchyhe Consumer Confidence Index (CCI) increased by 1.3% in April, compared to March 2024.

This is the third consecutive month with increases in the variable, which measures the “mood” of consumers, after two months, December and January, of sharp decline. In this way, the accumulated increase in the last three months reached 4.4%.

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As in March, the indicator advanced in the City of Buenos Aires (CABA) and Greater Buenos Aires (GBA), in 5.55% and 4.81%, respectively, but descended into the interior of the country, by 5.50%; in all three cases, comparing with March.

According to the survey, the improvement in the CCI for the fourth month of the year was due exclusively to an improvement in the “Personal Situation” of the respondentswhich increased by 5,46%since the “Macroeconomic Situation”, which arises from asking how the country’s macroeconomy will be in 12 months and in the next three years, as well as “Durable Goods and Real Estate” They decreased monthly by 0.74% and 2.14%, respectively.

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Besides, increased by 1.26% for lower-income households and 1.54% for higher-income households; by income was also the “Personal Situation” subindex that drove the improvement. On this point, it was recorded an increase of 6.28% for low-income households and 5.49% for high-income households.

The work, which has been carried out since 1998, also showed that the accumulated increase in the “Personal Situation” for lower-income households in the last two months is 12.9%and of 4,4% for those with high incomes.

It should be noted that the subcomponents to prepare the Consumer Confidence Index can be separated according to whether they correspond to perceptions regarding short-term conditions or long-term expectations, which they call “Present Conditions” and “Future Expectations”.

In April, at the national level, both registered an increase compared to March of 2.5% and 1.0%, respectively. In the year-on-year comparison of these components, a drop of 35.2% is observed in the “Present Conditions” component and an increase of 21.2% in the “Future Expectations” subindex.

Deposits and loans in pesos plummet but rise in dollars

The fall in consumption does not impact confidence

The numbers from the survey of the Torcuato Di Tella University are complemented by those disclosed by the consulting firm Claveswhose Consumer Confidence Index reaffirmed that, in March, the personal situation of consumers improved 2.76% compared to February. However, accumulates a year-on-year decrease of 2.20%.

The report highlighted that products such as food and beverages, cleaning supplies and perfumery, meat and automobileswhich performed well in 2023, They started 2024 with numbers in red.

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On the other hand, The consumption of milk, clothing, footwear, textiles and electronic products and household items showed, In these first months, a deepening of the fall that had been dragging on since previous years.

However, the National Consumer Confidence Index (CCI) “fluctuated with the pace of the recent change of government and the impact of the economic measures implemented by the new management”indicated the analysis.

In that sense, it was highlighted that “although those consulted refer to an inferior personal situation compared to the same period in 2023, The outlook for the future of the macroeconomic situation showed notable year-on-year growth during February 2024.”

When asking what the macroeconomic situation will be like in 12 months, and what it will be like in 3 years, a monthly increase of 56.56% was recorded in Marchand just like in February, It is the only variable within consumer confidence that accumulates an increase in the interannual variation, with a 27,32%.

“It will be crucial warn in 2024 how this indicator evolves to observe the support that the current administration may generate,” the letter concluded.

RS / LR

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