Crisis in Argentina generates ‘supermarket tourism’ – 07/13/2023 – Market

Uruguayans are crossing the border into Argentina to buy cheap food and fuel in their crisis-hit neighbor, but the trend is plunging businesses close to the border into a crisis of their own.

The manager of the Uruguayan supermarket, Noelia Romero, said sales were falling fast as her customers increasingly made day trips to Argentina in search of bargains.

“We’ve been hit hard in terms of groceries and cleaning supplies,” Romero said. She works in the city of Fray Bentos, separated by the Uruguay River from the Argentine city of Gualeguaychu, easily accessible by bridge.

Argentina struggles with inflation of more than 100% and a weak currency, the Argentine peso, which has lost about 25% of its value against the dollar this year despite tight capital controls that have slowed its decline. In Uruguay, annual inflation is at 6% and the local currency has largely strengthened against the dollar.

This ongoing economic crisis has created a dilemma for cities located on the borders that Argentina shares with Bolivia, Chile and Uruguay because they are unable to compete with Argentine prices, often just a short distance away.

“Fuel in Uruguay costs seventy pesos (US$1.58) per liter and here in Argentina we pay twenty pesos (US$0.53), so it’s much better for us,” said Robert de Lima, who traveled less than 45 km from Uruguay to Gualeguaychu.

High levels of unemployment and bankruptcies were reported in border towns, which forced Uruguay’s government in May to introduce economic measures to help protect traders, which included some tax breaks and discounts on gasoline and medicine.

Uruguayan President Luis Lacalle Pou has acknowledged that there is a problem with prices being so low in Argentina, with demands from regional governors for his government to implement a temporary import tax on foreign goods transported across the border.

Abelardo Alzaibar owns a pharmacy in Fray Bentos and said that, even with incentives, the disparity in prices creates “enormous” problems for the survival of local businesses.

“There are establishments closing, stores in debt and evidently no signs that this is going to end soon,” he added.