Announcements in the midst of the war on inflation: the government seeks to return the price of bread and other wheat products to the value of February

In another chapter of the so-called “war on inflation”, the Minister of Productive Development, Matías Kulfas, announced that the government intends to return the prices of bread and other wheat products to February values for final consumers.

At a press conference held at the headquarters of his portfolio, Kulfas indicated that a trust will be used for this purpose “to stabilize the price of wheat”. In addition, he commented on the conclusions of the meeting with food companies and “the Government's central objectives for transforming growth into improvement for all Argentines”.

Previously , Kulfas and the Secretary of Commerce, Roberto Feletti, met with businessmen from the Product Industries Coordinator Food (Copal) and the Association of United Supermarkets (ASU).

The authorities accused the sector of speculators and threatened to use procurement and competition laws, among other tools that were already unsuccessfully used.

In supermarkets, there are more and more gaps and signs of “you can only take two products”. This type of reaction is not new, but it is increasingly visible. “The issue of missing is widespread and it is a matter of the industry, not the distribution chain... and the cartels, as happens in all shops, is so that no one is left without product,” added the supermarket source.

Missing products are a classic these days, especially oil, milk and products related to flour, such as noodles. So is the tension between manufacturers, distributors and outlets, especially supermarkets. Everyone points to the other in the middle of the price hike.

Last Friday, Alberto Fernández's speech promising to start the “war on inflation” did not have concrete measures to push prices down. In a recorded speech, the President highlighted that Congress approved the agreement with the IMF to refinance Mauricio Macri's debt and alluded to the impact that Russia's invasion of Ukraine will have on inputs and commodities.

As a result, he emphasized the consequences that the increase in wheat could have: “It would increase the production costs of bread, noodles, flour that millions of Argentines and Argentines consume. And these are not increases that unfortunately we suffer due to the macroeconomic disorder we faced, but rather an impact that would hit households even more with unusual increases in the basic basket.”

For this reason, he anticipated that a “stabilization fund will be set up with the aim of preventing the transfer of this increase in the international price to the price paid by Argentines and Argentines” and said that the ministers of the economic area will take the necessary measures.

“I have decided that the economic cabinet should concentrate from this moment on implementing all the measures necessary to deal with inflation, in particular what we see in food. I have given instructions to my ministers to build agreements with the different sectors but that they do not hesitate to apply all the tools of the state to set and enforce the necessary measures. They will be responsible for keeping you informed daily about the measures that will be implemented from this very moment,” said the president.

The decision came after inflation in February rose by 4.7%, after 3.9% in January, and with the prospect of price increases exceeding 5% in March, according to the Government, due to the international rise in the price of raw materials following the Russian invasion. In fact, the annual rate of inflation has exceeded 50% since 2021, well before the start of the war in Europe, after the 36% recorded in 2020. For this year, given the increase in the devaluation of the peso and public service tariffs, it is expected to be around 55% to 60%, although the Government has estimated an average increase of 43% in the technical agreement with the IMF staff.

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