Inflation in BA?

[PhilipDT]

Not spending dollars at the moment is madness . With close to 30% inflation and a peso that is not devaluing this is creating the impetus for all these large purchases.

In 2010 Argentina sold more cars than ever recorded in history and for the simple reason to offset inflation.

thats evidence that people are spending pesos, not dollars.

 

[perry]

thats evidence that people are spending pesos, not dollars.

Argentina is in the top three countries world wide with dollars . 95% of all large purchases are done in dollars ie cars, properties , paintings etc etc. Buenos Aires is an wealthy city and is 13th richest city in the world .
http://en.wikipedia.org/wiki/List_of_cities_by_GDP#List_of_cities_in_the_world_by_GDP


Now of course there are huge disparaties in wealth but the wealthy are very cash rich and most of their cash is US DOLLARS:

One of the reasons for the high inflation in Argentina is the weakening dollar and the non movable peso . In Brazil and other latin american countries that have flexible exchange rates inflation is lower.

 

[PhilipDT]

Argentina is in the top three countries world wide with dollars . 95% of all large purchases are done in dollars ie cars, properties , paintings etc etc.

One of the reasons for the high inflation in Argentina is the weakening dollar and the non movable peso . In Brazil and other latin american countries that have flexible exchange rates inflation is lower.

I get that but the fact that cars are flying off the shelves seems to me to indicate that people are try to take advantage of the cheap dollar and offload their overvalued pesos. Since my monies are dollars it seems advantages to me to wait for a devaluation of the peso and a corresponding drop in dollar denominated prices right?

 

[perry]

I get that but the fact that cars are flying off the shelves seems to me to indicate that people are try to take advantage of the cheap dollar and offload their overvalued pesos. Since my monies are dollars it seems advantages to me to wait for a devaluation of the peso and a corresponding drop in dollar denominated prices right?

I am sorry but you do not seem to get it . Prices for cars are very dear and are much more expensive in dollars than the USA or most countries.

The reason for the spending frenzy is that the dollar is not appreciating like it has against the peso meaning that to keep large amounts of dollars is highly deflationary and downright dangerous.

 

[bsas]

...
One of the reasons for the high inflation in Argentina is the weakening dollar and the non movable peso . In Brazil and other latin american countries that have flexible exchange rates inflation is lower.

The peso is not 'non-movable', and hasn't been since it was pegged at 1 peso to 1 dollar until 2002. The value of the peso floats like any other currency, but has been kept from huge swings (for now) by purchases or sales of US dollars by the Argentine Central Bank. It is more of a 'managed' exchange rate, but this has its limitations.

The fact that inflation has not translated over into a declining value of the peso against the dollar simply means that Argentinan businesses are less competitive on an international basis, since their costs are increasing in dollars due to the rise in inflation.

Inflation is lower in other countries in the region because they've learned something from their past mistakes, unlike Argentina.

 

[gouchobob]

The peso is not 'non-movable', and hasn't been since it was pegged at 1 peso to 1 dollar until 2002. The value of the peso floats like any other currency, but has been kept from huge swings (for now) by purchases or sales of US dollars by the Argentine Central Bank. It is more of a 'managed' exchange rate, but this has its limitations.

The fact that inflation has not translated over into a declining value of the peso against the dollar simply means that Argentinan businesses are less competitive on an international basis, since their costs are increasing in dollars due to the rise in inflation.

Inflation is lower in other countries in the region because they've learned something from their past mistakes, unlike Argentina.

I think your comments on inflation are correct. Although Argentinians are buying a lot of cars most of the big increase in production went to Brazil. I believe over 60% of the cars produced go to Brazil. I think the economy in Argentina is doing well in spite of bad policies by the government most of the growth is from external demand. Any significant change in this external demand will spell big trouble for the economy, my opinion we will see this in within the next year or two.

 

[ghost]

ahhh - how interesting the price discrepancies based on neighborhood. I'm in Canitas/Belgrano area.

In my neighborhood:

Large Napolitana pizza (from a not fancy place) is 42 pesos, so 11 dollars or so.

Empanadas, 4.50 pesos (so about 1.15)

Average Rent for a furnished 1 BR is around 1000-1100 ( so what you're paying for a 4br)

Dinner for 2 last night (he had a cheeseburger, I had a club sandwich. 2 beers each). 175 pesos including tip (45 dollars)

Average drink at a bar in Canitas - 30 pesos (speciality drinks can run 40 and up)

And just as an FYI on health insurance - I'm currently paying (including IVA) 1150 pesos for month for my OSDE plan as a single person

Time to move that business back to Buffalo, Kiddo. 2 beef on weck and 4 beers $15.50

 

[jago25_98]

Here´s the picture emerging to me:

The Argentine government actually do a good job (if it wasnt for beaurocracy id say very), but
this is completely undermined by a wholly separate and more powerful entity that is printing money.

- just like in other countries

Only here, the history of fiat currency is even more extreme and has been for ages.

The Argentine response to this has mostly been to resort to the dollar.
...and of course, the Uruguay safe deposit box.

What amazes me is that I can see few other attempts to defend against inflation. No local currencies, timedollars, no trade schemes, only 4 bitcoin.org nodes seen here. Nothing like this developed even with people dying on the streets in 2002?
Perhaps I miss something with Argentine strong philosophical movement, were such inflation defence responses repressed? -or seen as immoral?

All those rolled up dollars under the argentine are going to be worthless as they really start to depreciate in 2011-2020. Will people start to address the problem head-on or just switch to another fiat currency like the Euro, only for the same thing to happen again and again until even the Bancor and no doubt on again from there.


I notice if you live the good life, the simple life you can get by very well. Generally anything a luxury is expensive, though increasingly I would say that electrics and gasoline is not a luxury any more. Employ a personal cook and use the Bolivian verdurias, I say.
However, this is coming from someone who has moved here recently. The main idea for many in the past for coming here was to live it up on a stronger dollar. That, I think, is not the way its going.

I already cant stop thinking about how to get a affordable car... in the UK you can get a working car for less than 2000 pesos. Here its at least 1000 dollars.

 

[dr__dawggy]

ahhh - how interesting the price discrepancies based on neighborhood. I'm in Canitas/Belgrano area.

In my neighborhood:

Large Napolitana pizza (from a not fancy place) is 42 pesos, so 11 dollars or so.

Empanadas, 4.50 pesos (so about 1.15)

Average Rent for a furnished 1 BR is around 1000-1100 ( so what you're paying for a 4br)

Dinner for 2 last night (he had a cheeseburger, I had a club sandwich. 2 beers each). 175 pesos including tip (45 dollars)

Average drink at a bar in Canitas - 30 pesos (speciality drinks can run 40 and up)

And just as an FYI on health insurance - I'm currently paying (including IVA) 1150 pesos for month for my OSDE plan as a single person

My wife and I spent part of the Christmas holidays in Hawaii. We stayed on Waikiki Beach. We ate lunch in a beach front bar/restaurant several times. A luncheon sized steak and a local beer for me and fish tacos and water with lemon for my wife...cost less for us than your cheeseburger/club sandwich meal. I have not eaten in Las Canitas in awhile....I used to think of this area as less expensive than Palermo or Recoleta...but it sounds like prices have gone up.

 

[citygirl]

Time to move that business back to Buffalo, Kiddo. 2 beef on weck and 4 beers $15.50

lol - yes, but then I'd have to deal with the winters. So I'll happily spend too much in exchange for sun

The rumor has it that after the elections, the exchange rate will be closer to 5-1. But that is of course just a supposition, not certainty.