How will fuel hikes affect prices in the rest of the economy?

An increase, according to the highest private estimates, with inflation touching 30% in December 27% Fuels will put further pressure on prices. This is the third increase in a month.

For perspective, oil companies have already used an average increase of 30% in the last week of government Alberto Fernandez And after a 118% exchange rate hike between 30% and 37% took the official dollar to $800.

so, 2023 closed with a total fuel increase of 260%, as reported by Raul Castellanos, president of the Chamber of Fuel Entrepreneurs. This increase would be 60 percentage points above the estimated annual inflation rate of 200%.

Now a liter of gasoline is approaching its historic value of one dollar: the super gasoline average $700 And the premium is sold at approx $900.

Regarding the impact of inflation, Santiago Manochian, Ecolatina's Chief Economist explained that for every 10 points increase in fuel prices, 0.4% is added to the Consumer Price Index (CPI) for that month. “For example, in December, when they rose to 75% in the city of Buenos Aires, it directly added 3 points to inflation, while in January 27% already adds 1.1%,” he said.

The increase in fuel consumption will be felt in the economy at various prices, although to what extent is difficult to estimate. In this regard, Economist George Neros It pointed out that this would most affect products that have high logistical costs to reach consumers. This is the case of mass consumption products found in supermarkets.

In the same sense, Manoukian said: “The transformation of the price increase in the economy depends on how intensive the use of transport, logistics and fuel is in each activity. In many companies, it is a relevant element in the cost structure.

In this regard, according to the Argentine Federation of Freight Motor Transport Businesses (FADEEAC), the transport cost index has already increased strongly and closed with a double record in 2023: it increased in December. 28.23%This is the highest monthly value in the last 30 years, and the highest in cumulative annual value 248%, More than double that recorded in 2022 (121%), which was the highest figure in 20 years.

In December, 8 of the 11 commodities that make up the index recorded significant increases: lubricants (70.4%); fuel (63.3%); insurance (39%); tires (32%); general expenses (29.6%); financial cost (23.4%); repair (17.1%); and rolling stock (4.39%).

Even with this increase in costs that make up the final price paid by the consumer, the Executive Director of FADEEAC, Roberto RiveroIn a conversation with Infobae, this is a myth, the corporate version said, adding that inventory should increase at the same rate as fuel. “Inventory does not impact more than 7-8% on commodity prices. For refrigerated trucks, the cost is higher, but the conversion to shelf value can never be more than 10%,” he noted.

“Mass consumption companies They do not reflect the actual cost up frontIt is very short of the final product,” he added.

For his part, the economist Martin Polo He assured that the 27% increase and the resulting increase in traffic “will have a greater impact on total prices as all traded goods will capture this price inflation”.

One of the areas of greatest concern is food, which has the highest incidence in November, across all regions. 15.7%. In December, according to Ecolatina ratings, the segment rose 27.7%. Meanwhile, according to consulting firm C&T Economic Advisors, food and beverages increased 23.5%Within and close to the generalized increase 30% In its vast majority. The most notable increases are meats and oils and fats 40%

Also, the increase in fuel will affect the value of public transport. Bus companies say there is a sharp increase in costs without changing the price of the ticket or the subsidies they receive.

In December, the average price was without subsidy $800, Tickets were about $39. As a result, and unable to cover costs, the service was curtailed. In this framework, an update was provided to bring minimum ticketing $77 From January 15th and another adjustment for February 1st. Real prices rise again with a fresh increase in fuel.

The Association of Automotive Transport Entrepreneurs of Argentina (AAETA) reports that in the coming days new meetings will be held with the government, which wants to update the monthly tariffs in the Buenos Aires Metropolitan Area (AMBA) in line with changes in operating costs. And with values ​​that are handled locally in the country.