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Food inflation: three factors that could push up meat prices starting this month - Infobae
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Inflación de alimentos: los tres factores que podrían hacer subir el precio de la carne a partir de este mes
Menor producción, estacionalidad y una relativa mejora en el presupuesto de los hogares que empujaría la demanda derivaría, también, en un eventual alza de precios
www.infobae.com
October 02, 2024
Lower production, seasonality and a relative improvement in household budgets that would boost demand would also lead to a possible rise in prices.
File photo of a woman in a butcher shop in Buenos Aires (Argentina). EFE/Juan Ignacio Roncoroni
The price of meat has been a real headache for governments in recent years, given its high impact on the inflation rate. However, this year the item has only provided relief to the Consumer Price Index (CPI) measured by Indec. This is despite the fact that after the devaluation in December last year, which caused inflation to jump by 25%, stratospheric prices of $25,000 per kilo of roast beef were predicted. However, the opposite occurred: in real terms, meat is now 15% cheaper than ten months ago, which still did not prevent consumption from collapsing to historic low levels.
But this reality could change starting this month, in both dimensions: prices and consumption. In neither of them, however, are drastic variations expected.
This is the conclusion of a recent paper by Ieral economist Franco Artuso , according to which meat is one of the items that has exerted the least pressure on consumer prices so far this year. The real drop in the price of meat “reduced the impact on the general consumer price index and has contributed to the decline in inflation that has been observed in 2024,” he said, explaining that according to the share of beef in the consumer baskets that statistical agencies usually monitor when preparing price indices (5-6%), meat went from contributing 2.2 percentage points to inflation in December 2023 to contributing just 0.11 points to inflation until 2024.
Fuente: Infobae con datos de Inflación Congreso hasta abril de 2016 e INDEC
This is based on the price of 18 cuts on that date, with an average value of $7,445 per kilo to the consumer, while in August, the variation according to the Institute for the Promotion of Beef (Ipcva), was 7% on average. It is a price that has not changed very significantly since the end of last year.
However, two factors are now emerging that could change this trend. “In the face of what is to come, the big question is what will happen to the price of meat in the coming months; whether it has room to continue falling and contributing to the general slowdown in prices, or whether, on the contrary, it will begin to appreciate from now on,” said the analyst, who pointed out that there are elements on both the demand and supply sides that create a scenario of rising prices.
It is estimated that meat went from contributing 2.2 percentage points to inflation in December 2023 to contributing only 0.11 points to inflation in July 2024 (Fundación Mediterranea)
On the demand side, he said, if economic activity begins to pick up, as is expected to happen towards the end of the year, families should return to their usual consumption patterns, pushing for a greater share of beef in their baskets (which is currently at rock bottom) and the bearish factor that implies the substitution of other meats on the counter would tend to attenuate. This factor was, during the first seven months of the year, at least, fundamental in price stability since households replaced these consumptions with chicken or pork, whose prices had a greater variation although they remained below that of beef.
On the supply side, beef production fell almost 9% year-on-year during the first seven months of the year and the value of cattle that typically supply the domestic market increased almost proportionally (heifers and young bulls rose 7-8% year-on-year in Cañuelas). This year, therefore, the slaughter of beef will undoubtedly close below the previous year's record.
If we add to this the fact that seasonally, the live cattle, the main cost in meat production, tends to correct upwards in recent quarters, and that it could begin to arbitrate a higher price for export due to the recent reduction of tariffs on meat products and by-products, the pressures on counter prices would also be upward on the supply side during the coming months.
Of course, this scenario might not happen for a product that is so price-sensitive. In fact, despite the drop compared to December, beef is not “cheap” compared to last year, but 6% above the average from January to July of last year, which explains why its consumption has fallen 20% year-on-year and is now at historic lows.
