VINO
Well-known member
Prices all over not just Argentina are up. I do think that the exchange rate is off. If the blue dollar went up it would bring down their costs. But not sure how much inflation would go back up if the peso devalues.
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What happens if Argentina gets too expensive? What are alternative cities/countries to move to when it's overpriced in Argentina?
- Thread starter Larry
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daveholman
Well-known member
The biggest driver of inflation is printing money. Which Argentina is not doing, currently. If they continue on that course, lifting the CEPO should only be mildly inflationary.
That's the Austrian School theory, anyway.
That sounds in theory true but do you understand all of this intervention by the government? The sterilization of the pesos? It is very complicated.
The more people I talk to here the more tell me that Milei can't find a way around this mess. This economy has no internal market. The costs are extremely high here in USD and salaries are very low. People are cutting back on purchases because they have no money. I just think the easy cuts have been made and no big plans that can turn things around. Maybe I am wrong.
Cheap Bastard
Active member
But it is ridiculous the carry trade that the government is doing. The value of the peso is can't be worth the prices they are trading at. Prices are insane here in BA.
Parking prices are crazy here! My Argentine friend was visiting me and drove up from Bariloche. He couldn't believe the rates to park here. It is about $4 dollars per hour! That is just insane. How can locals justify that. These parking garages must make a fortune!!
I just read that article. The archived version is here https://archive.ph/CXrb3Exactly. It is natural that we will compare prices in dollars since most of us here probably have our savings or earnings in dollars. It looks like some on here are from the EU or the UK so they probably have different but even my friends from the UK save in USD. Everytime I want to complain I think about my friends that are local here and keep my mouth shut and feel fortunate I have dollar savings.
Everyone is making fair arguments. Everyone is complaining about prices here in BA. I just got a good email from @Argentina Expat. I laughed at the opening of the email. It said A famous economists one said that there are only 4 types on countries in the world: developed countries, developing countries, Japan, and Argentina.
Seems like he was 100% on point.
How else can you explain that the country has become expensive for everyone - locals, expats, tourists, businesses - while still having the fastest economic growth in the last 3 years?
Unique country indeed.
It is true. It was expensive in 2017 but I don't remember prices ever being THIS expensive. But I am guessing the peso might devalue a little but it is hard to tell. Governments can manipulate currencies for long periods of time.
Argentina: A country that has become expensive for everyone, from locals to tourists and businesses
The peso rose sharply against the dollar in 2024, causing a significant drop in tourism. The government maintains it will not devalue the currency.www.lemonde.fr
Paper after paper is posting about how Argentina is expensive now.
daveholman
Well-known member
Is the peso too high, right now? Yes. Removing the CEPO will devalue the peso vs the dollar.
The question is whether that will kick off another round of hyperinflation. As long as the government keeps limiting the money supply, it shouldn't.
If the peso can find it's true value and inflation is moderate, Argentina is in a position to grow it's economy, allowing wages to catch up with prices. And removing more trade barriers will result in downward pressure on prices, while the amount of foreign investment announced in the last year is sufficient to increase employment and wages.
Argentina has been mismanaged for decades. Recovery will take years.
James Bond
Well-known member
Wages ARE going up. My friends there tell me their salaries have doubled in the past year. The problem then is the stores are trying to make up for that in the prices and prices keep going up too. @daveholman you haven't been in Argentina long. You will find out there is how things should work and how things actually work in Argentina. They are not one and the same. Normal laws of economics do NOT apply to Argentina. Nothing works in principle how it should. You will soon find that out.
Betsy Ross
Well-known member
Very true. Argentina is another type of country. Nothing works as it should.
I doubt the Austrian School theory includes conning the public with meme coins and then rug pulling and cheating people out of hundreds of millions of dollars either. The more I watch Milei the more I realize he has no freaking clue what he is doing!
daveholman
Well-known member
Who was it that said "There are 4 kinds of countries: developed countries, developing countries, Japan and Argentina"?
I still think people underestimate the power of not printing money.
It's the one thing no previous government here has tried.
Simon Kuznets, a Nobel Prize-winning economist is the one that said that.
I think he would also say what Argentina is doing with their intervention of their currency is also the wrong idea. He would probably say to let the currency float. What Mili is doing is not a real solution. Just mechanisms to intervene in the market. It is not sustainable or a real plan.
Avocado
Well-known member
He has no plan! All the easy gains are made. Not much to do. Recession is still here. Factories are going to close. More people losing jobs. No one is spending money. Beef consumption at all time low. What more needs to be said?
daveholman
Well-known member
If you're not embroiled in scandal, are you even the President of Argentina?
When it comes to corruption, the current administration are pikers compared to the las
GDP growth of 5-6% this year isn't a recession.
How do you explain no one buying anything? Are those numbers believable? Look at consumption of just about everything. Down. Supermarket, fuel and many other things. Sales all down. People say inflation is down but it is not on many items. I went for a coffee yesterday and a flat white coffee was 6500 pesos or almost US$6. That makes no sense at all.
I already have my apartment listed to rent and I am forced to leave a city that I love. The situation is unsustainable. I know other people not just expats that are hanging on in the hope for some miracle but they will most likely need to leave Argentina also.
Betsy Ross
Well-known member
The changes are all necessary. Painful but necessary. You can't not go through some pain to fix things. My cousin has an addict. First with alcohol then drugs. We had to send him to rehab several times. I watched him struggle and it was painful to get off the drugs and alcohol. Very painful. There is a certain amount of time an addict has to go through before they are back on their feet.
No different here in Argentina. Expats have been complaining about these expensive cycles every time it happens. Some move here when it is cheaper then cry when it is expensive. It may sound cruel but it does not do any good to complain daily about it. If it is too expensive you have 2 options. You can either leave to some where else that is less expensive. Or you can change your lifestyle and stop going out as much or spending on things you might not need.
Finance Prof
Well-known member
Exactly. It doesn't do any good to keep complaining. Probably makes sense to move if you can't afford these prices. Those very cheap prices were not sustainable. Charging nothing and then having people have their AC on and all their windows and doors open all day didn't make sense. If you came to live in Argentina just because it was cheap you probably came for the wrong reasons.
I have watched things go from cheap to expensive to cheap to expensive before. The times they go expensive I just cut back on spending. I don't buy coffee at cafes. I make it at home. I only go out to eat in a restaurant now 2 times a week instead of 5 times a week. Nothing you can do about condo fees and utility expenses going up. That is here to stay. Probably the same about healthcare premiums. I don't think those prices will ever get lower. If anything they will get more expensive.
daveholman
Well-known member
I'm sorry you can't find any of the dozen places I've gotten coffee for $3ish.
Leaving a city you love rather than moderating your lifestyle doesn't seem logical, but that's just my opinion, I could be wrong.
Betsy Ross
Well-known member
Exactly. There are plenty of places for 3,500 pesos or so. I am not saying that is cheap either but no one should be splurging for pricey daily coffee out if they can't afford it. It is really no different than back home in the States. You have to learn to moderate your budget and lifestyle. Good deals are still to be had admittedly much higher than before but I think those days are gone forever.
earlyretirement
Moderator
Very true. You can easily find places that charge as much or more than the USA or Europe. But there are also places that have good value in Buenos Aires. Nicer neighborhoods are always going to be more expensive. Many expats have the attitude because at one time they were able to find everything cheap they should always have that right and privilege when that simply is not true.
I've been coming to Buenos Aires for about 24 years now and there are always going to be fluctuations in prices. Argentina has really had chaotic periods between relatively calm periods due to past Presidents and administrations. The very bargain basement prices of the prior years are gone. It still could get a bit less inexpensive if the blue dollar goes up but prices are being corrected in the utilities, salaries, insurance, etc. so we aren't going to get the cheap prices from before.
You just have to live within your budget and moderate it just like @daveholman mentioned. There are plenty of places in the world with cheap coffee. But typically if something is cheap then another thing will be expensive. Case in point, I was in Paris a few weeks ago and coffee and also meals were very cheap but things like rentals and real estate are sky high.
You aren't going to find a perfect utopia where the lifestyle is really high end and everything is cheap. Buenos Aires was crazy cheap in 2023 but there was suffering by the locals so that wasn't an ideal scenario. There has to be a balance.
fetch rover
Well-known member
I think it is ok for locals or even expats to complain about prices. My husband worked in Argentina a few decades ago and he said that the locals LOVE to complain about everything. It is probably logical for people to vent about higher cost of living. However that won't make prices go down.
Yes there are some places where you can get coffee for $3 dollar coffee but the places are shrinking and prices are still going up. I am moderating my lifestyle. I can't afford to go out to eat at restaurants like before. My daily coffee in a cafe to meet with friends is almost gone now. I am just frustrated that most people I know are doing worse not better yet media is trying to portray that things are much better.
People talk about fake media coverage of inflation and economic situation with the Kirchner's and others. I admit that was happening but the same thing is happening now. I know that prices can't go up forever. This eventually will crash. But it could take a while. These prices are artificial. The exchange rate is manipulated.
I know peso must eventually get devalued even if Milei is not admitting it. I will rent out my apartment for a while and move and come back once the cepo is removed. The informal dollar will come back and prices in dollars will be more realistic then. Prices now are not real.
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