Is greed behind a lot of the inflation?

[sergio]

I am convinced that a large part of this inflation is greed. Prices go up constantly because there is confusion about pricing and fair values. Merchants take advantage of the confusion. During the 1 peso - 1 dollar era any price increase had to be justified. The public got used to the idea of price stability. Now that there is chaos in pricing merchants can easily mark up without cause. Rents are up but the price of gas, water, electricity etc. remain frozen. Has anyone noticed the illogic of certain pricing: for example, a main course in many restaurants costs around $25 pesos but dessert is easily $15 pesos or even more. A cup of coffee, almost uniformly $1,50 pesos during the 1-1 era, is now $4,50 or much more in some premium places. I can't help but think that these prices are not necessary yet they keep going up and the public seem willing to pay.

 

[vr236]

Besides the obvious corruption with which Latin America is plagued inflation is explained in simple economic terms. Economic growth brings inflation. More employment, i.e. less unemployment is inversely related to inflation. When you have more people wanting to consume the same amount of goods, goods become scarce and their prices go up. There are a number of ways you can control some of the inflation. Price controls, subsidies and flooding the market with goods. Unfortunately the last is what works better in developed countries like the US where almost everything you buy is made in China. That is harder to accomplish in developing economies because of high import taxes that are placed in order to protect weak national industry. Add to that the expats, tourists and the “new rich” which you find a lot of in Capital that are all wanting to buy the same “luxury goods” and prices are bound to go up. Even though merchants, are all argentines for that matter, have a me first attitude especially towards money, it is not entirely their fault.