These high prices cannot be sustained absent some massive foreign investment boom (that will not happen). While it’s easy to get upset about price rises, I am confident this will adjust.
This is where I'm less confident; I've been living in/coming to Argentina for over a decade now, and businesses just don't seem to adhere to the normal laws of supply and demand. Don't get me wrong, now that we're in a recession (and even before) they successfully clamped down on employees' income by saying "well, you know the state of the economy", but goods and services here simply don't adjust to reality - they'd rather throw out goods or let them collect dust rather than sell for a market acceptable price. Here are some things I can think of off the top of my head:
- Electronics (anything really, but especially US middle class items like PlayStations or entry level iPhones or laptops) will often be several generations/years behind, with the current generation/year's price, if not more. I saw a PS4 advertised as a "hot sale" for the current PS5 price in the US
- Perishable food; I've seen items like seasonal confectionary at Coto go from double digit prices in USD to reduced for clearance after the holiday to then expiring on the reduced rack, all because they don't want to sell at anything less than cost. Jumbo has a freezer bunker FULL of Haagen Dazs ice cream that is going to get freezer burnt before it sells, it's half of the regular US size @ 250ml, and costs 4.5 times as much at $18 USD/unit
- Real estate. There are more houses and apartments for sale than ever it seems, yet prices are insane compared to market conditions. I'm not talking about how in the US and Canada a 500sqft bachelor is almost a million dollars in NYC or Vancouver because people want to live there and there is both domestic and foreign demand, but rather how nobody can afford properties here, there's very limited foreign demand, yet people think a bachelor in Flores is worth 250K, or a house in a barrio that's a step up/next to a villa is worth 150K USD in zona sur
- Vehicles. They are generally, like housing, divorced from reality. A national used car with roll up windows, terrible mileage, and being over 50% plastic costs upwards of tens of thousands of dollars, while new national cars can be several thousands more than in Europe, have little to no safety features or only 2 airbags, yet are produced in Argentina with Argentine wages and components, all much cheaper than making them in Europe
All this has convinced me that despite Milei insisting "supply and demand" Argentine businesses do not adhere to this, and as such we'll continue to see the practice of goods/services being insanely priced compared to their component requirements and labor, especially compared to other countries for the same or similar goods.
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