consumer Behavior Shifts Amidst Economic Transition

BUENOS AIRES – A transformation in consumer behavior is underway, marking a departure from the patterns observed since 2023. With price stability still in progress and an economic landscape vastly different from the past two decades, traditional consumer habits are being challenged.

Analysts note that consumer reactions to inflation have shifted. Previously, the expectation of rising prices drove immediate purchases. Now, with prices stabilizing, consumers are holding back, anticipating further price drops or at least consistent pricing. Though, this behavior assumes disposable income, which many lack, leaving them unable to afford purchases now or later.

Sector Performance: A Mixed bag

While some sectors struggle,others are thriving. Darío Remonda of Motor Center,an official Toyota dealership,reports meaningful market growth exceeding 50%. Car sales are projected to reach 600,000 units in 2024, up from 400,000.Remonda attributes this to improved economic policies facilitating imports and a resurgence in credit availability, with 35% of car sales now financed.

Demand for cars and housing has surged by 102% year-on-year, while appliance sales have increased by 79.4%. Loans for car and home purchases have also seen substantial growth between June 2024 and the present,rising by 145% and 284% in real terms,according to Economy consultation data.

“The market is growing above 50%,”

In contrast, the retail sector faces challenges. Supermarket sales grew by 4.3% between January and April,according to INDEC data,but wholesale sales declined by 6.6% during the same period. This divergence might potentially be due to supermarkets offering discounts through virtual banks and wallets, which wholesalers do not provide.

Changing consumption Habits

Armando Farina, head of a national chamber, notes a shift towards local stores for daily necessities, replacing the traditional bulk purchases at wholesalers driven by anticipated price increases. Digital sales are also growing, and non-traditional channels like pharmacies are expanding their offerings of food and cleaning products.

Economist gastón Utrera, who analyzes sales data from ten productive sectors in the province of Córdoba, disagrees with the notion of declining consumption. He acknowledges that sales remain below previous years but are showing signs of betterment. He cautions against relying solely on merchant sentiment for data, emphasizing the need for rigorous statistics.

INDEC data indicates a 7.7% growth in “national accounts” between the second quarter of 2024 (the low point of the last recession) and the fourth quarter of 2024. While 2025 data is still pending, partial indicators are being monitored.

Damián Di Pace of Focus market suggests that financing options drive purchases of durable goods like furniture, mattresses, and electronics, while everyday expenses are strained by current income limitations.

the expectation is that the era of massive consumption, fueled by government spending, may not return if stability is maintained. Consumers are now more intentional in their purchases, favoring durable goods over immediate consumption.

Wage disparities and Available Income

Wage performance varies,with informal sector wages recovering,private sector wages stagnant,public sector wages lagging,and retirement incomes struggling. However, all sectors have experienced wage declines compared to five years ago.

Econviews, led by Miguel Kiguel, notes that while private real wages have recovered to pre-November 2023 levels, available income remains 10% below that date. This shortfall explains the sluggishness in mass consumption, as increased earnings are offset by rising essential expenses like gas and utilities.

Conversely, some individuals with high dollar-denominated salaries find car purchases more accessible. However, not all sectors are thriving. Hugo mercau, head of New Fly, reports a 50% drop in agency sales compared to March, despite record passenger numbers. He attributes this to a lack of disposable income to take advantage of the favorable dollar exchange rate.

Luis Neyra, a computer and IT vendor, observes a slowdown in demand and notes complaints about import delays. Damián Di Pace concludes that government fiscal policies have reduced market liquidity, with salaries barely keeping pace with inflation and intense competition further squeezing consumer spending.

Consumers may also be delaying purchases in anticipation of price reductions due to tariff adjustments or import policies.Fausto Brandolín of Fedecom confirms expectations of price decreases and notes the growing role of e-commerce, which now accounts for 45% of total sales, up from 10% in previous years.

Luis Méndez of Ama Hogar observes a decline in both foot traffic and digital consumption, suggesting a transitional period with expectations of a rebound later in the year.

The Keynesian model of state-led consumption through salary increases and incentives has been abandoned,paving the way for a new economic approach.

Jorge Colina, head of the IDESA Studies Center, argues that economic growth, driven by investment and exports, is necessary for consumption to increase. He criticizes the Keynesian approach of stimulating consumption to drive economic growth, which he believes led to high inflation.

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