Purchases by Brazilians in Argentina plummet after Milei – 03/18/2024 – Market

“My God, the fernet is R$42”, says Rodinei Luís, 51, from Rio Grande do Sul, pointing to the classic Argentine alcoholic drink as he parks his cart in front of the supermarket cashier. “Before it was R$17, things are twice as much”, he is surprised, taking his hands to his wallet.

Rodinei is at the El Cóndor wholesale store, a favorite among Brazilians who cross the border of the Uruguay River by ferry to take advantage of the low prices in the neighboring country, in the northern city of Oberá. Or they crossed.

From December onwards, when Javier Milei assumed the Presidency and made a change in economic policy, purchases plummeted. Now, some Argentines are even starting to do the opposite, crossing to Brazil to escape their own gondolas, something that hasn’t been seen for years.

Rodinei’s travel agency bus, which used to carry around 80 people a month from Santa Rosa (RS), now carries only a small group that went fishing and decided to stop to take some items that are still worth it. “Demand dropped to zero, our last tour was on December 12th,” he says.

In 2023, land and river crossings lasting less than a day to Argentina soared, with the country’s inflation constantly rising and the peso increasingly devalued in relation to the dollar and the real during the administration of Peronist Alberto Fernández. There were 2.4 million trips, compared to 1.5 million in the previous year.

Southerners living on the borders of Rio Grande do Sul, Santa Catarina and Paraná were attracted by the price and quality, mainly of cleaning and hygiene products and foods such as flour.

“Their washing powder and detergent are much better than ours,” says self-employed Júlio César Santos, 51, another of the few Brazilians in front of the supermarket, filling the trunk with dozens of yellow bags and a cooler full of ice for the yogurts.

They often followed promotions on Atadão’s social networks, shared gasoline with friends or relatives and crossed the border to “make ranch”, the month’s purchases. A deodorant could cost R$3, and price-controlled fuel generated queues at gas stations.

But this changed after Milei arrived, ended the freezes and promoted a strong devaluation of the local currency (which previously had an unrealistic value against the dollar), in pursuit of his main objectives: correcting prices, balancing public accounts, stopping issue money and contain historic inflation in the country.

This February, it celebrated its second consecutive month of surplus. On the other hand, he saw poverty rise to 57% of the population, as the measures caused prices to explode far above wages. The parallel “blue” dollar, used by tourists, also did not follow the rise, so foreign money became worth less.

Not even wine escaped, despite still being more advantageous than in Brazil. “We live off Brazilians who come in to buy, but traffic has dropped by around 60%”, says Darío Sánchez, 39, manager of the winery located right in front of the Alba Posse ferry, on the Argentine side of the border, in the province of Missiones.

“We opened in February and the flow was increasing throughout the year. After December 10th we suffered an impact, in January it stabilized, and now we have a drop again”, he says in the middle of the shelves. Wines that cost an average of 3 thousand pesos (R$ 15 at the current parallel rate) jumped to 7 thousand pesos (R$ 35).

“Shopping tourism” at the border depends heavily on the exchange rate, which is why its intensity fluctuates. “It’s not like in Paraguay that we have a structural price asymmetry. The difference with Brazil is exchange rate”, explains Gerardo Beltrán, secretary of the Argentine Confederation of Medium Enterprises (Came) who works in the region.

He has a more extreme view. He states that the entry of Brazilians to buy “has ended” and that this is even more visible in Argentine cities with a greater flow of goods, such as Bernardo Irigoyen, on the dry border with Santa Catarina, and Puerto Iguazú, on the triple border near the Iguaçu Falls .

In these places, he says, we began to see something that had not been common for a long time: “Today, Argentines are already crossing to Brazil to buy some basic food and personal hygiene products. The flow has completely reversed.” Rice, sugar and olive oil are some of the coveted products, but the purchasing power and quantities taken by Argentines are still smaller.

What happens with Brazil also happens with other neighboring countries, such as Uruguay, separated by a ferry from Buenos Aires; Chile, also easily accessible via the road that crosses the Andes Mountains; and Paraguay, where one of the main connections is a bridge between the large municipalities of Encarnación and Posadas.

There, for example, crossings to buy gasoline on the Argentine side were so frequent that an illegal market for 5- or 20-liter gallons developed. “That’s over too,” says Beltrán. After Milei’s measures, fuel prices rose by more than 80% and were on par with neighboring countries.