Argentina Freezes Supermarket Prices To Halt Soaring Inflation; Chaos To Follow

Tyler Durden's picture

Up until now, Argentina's descent into a hyperinflationary basket case, with a crashing currency and loss of outside funding was relatively moderate and controlled. All this is about to change. Today, in a futile attempt to halt inflation, the government of Cristina Kirchner announced a two-month price freeze on supermarket products. The price freeze applies to every product in all of the nation’s largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies’ trade group, representing 70 percent of the Argentine supermarket sector, reached the accord with Commerce Secretary Guillermo Moreno, the government’s news agency Telam reported. As AP reports, "The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1."

Perhaps they will. What consumers will certainly do is scramble into local stores to take advantage of artificially-controlled prices knowing very well they have two short months to stock up on perishable goods at today's prices, before the country's inflation comes soaring back, only this time many of the local stores will not be around as their profit margins implode and as owners, especially of foreign-based chains, make the prudent decision to get out of Dodge while the getting's good and before the next steps, including such measures as nationalization, in the escalation into a full out hyperinflationary collapse, are taken by Argentina's female ruler.

As such expect photos of empty shelves from Buenos Aires to start popping up in a few days, comparable to how threats of a gun and weapon ban by the US government did more for the top and bottom line of US arms dealers than any military conflict ever could.

Sure enough:

Economist Soledad Perez Duhalde of the consulting firm predicted on Monday that the price freeze will have only a very short term effect, and noted that similar moves in Argentina had failed to control inflation. Consumers shouldn’t be surprised if the supermarkets are slow to restock their shelves and offer fewer products for sale, she added.

In other news Argentina, just like the rest of the "developed" world, appears to have a slight inflation tracking problem:

Polls show Argentines worry most about inflation, which private economists estimate could reach 30 percent this year. The government says it’s trying to hold the next union wage hikes to 20 percent, a figure that suggests how little anyone believes the official index that pegs annual inflation at just 10 percent.

The BLS has the solution: just exclude any product whose price is rising from your CPI calculation, and voila. For everything else there is a hedonic adjustment.

The ironic comparison to the US does not end there however:

A more effective way to contain inflation would be to “reduce government spending, which is financing an expansion of the money supply, and to have a credible price index.”

Wait, are they still talking about Argentina or the US?

The government announced the price freeze on the first business day after the International Monetary Fund formally censured Argentina for putting out inaccurate economic data. The IMF has given Argentina until September to bring its inflation and economic growth statistics up to international standards. If Argentina doesn’t comply, it could face expulsion from the world body in November.

Well good thing the US complies with the IMF's stringent "seasonally adjusted" data reporting quality control. Or else, the US may have been expelled from the IMF too. And then who would fund the creeping bailout of Europe (aside from Germany of course)?

The IMF censure “is not just a new error ... it’s also a clear example of the organization’s unequal treatment and double standards in regard to certain member countries,” Lorenzino said. “Argentina, just as it agreed with the IMF to do, will keep working to improve its statistical procedures in accordance with good international standards.”

So to summarize: first capital controls, then a currency crisis, then expectations of sovereign default, then a rise in military tensions, and finally - price controls, after which all out chaos usually follows.

Study this sequence well: it is coming to every "developed" country near you in the months and years ahead.

But, as with every other hyperinflationary implosion, there is a silver lining: the stock market is soaring...

... at least in Peso terms. When priced in USD, the 360% stock market "rise" is more like -9% in the past 21 years. But luckily, the general public has a gene that prevents it from grasping the difference between nominal and real - something Ben Bernanke is very well aware of.

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TotalCarp's picture

Left wing govts can never accept that they are not in control of the economy. So they tinker and try to "fix" till it collapses in a domestic nightmare.

Right wing governments can never accept they are not in control of how the international arena functions. So they tinker and try to fix till it collapses into multitude of regional wars.

francis_sawyer's picture

Blowout sale... Everything in the store must go!... Oh wait!

flacon's picture

So what this says is stocks are a good store of value. Buy the dip in SPY, DIA, IWM! 


Anybody know what sort of drugs they put into gold and silver that are causing them to slumber so soundly?


The gold price measured in Dow Jones has gone nowhere since May 2010, nearly three years! (GOLD:DOW)



in4mayshun's picture

Just wait til the masses realize that there has been price controls on precious metals for years...groceries won't be the only thing missing from shelves

economics9698's picture

Fuck Obummer will be doing this soon.

trav777's picture

it's unfathomable that both government workers could exist that are stupid enough to believe that price controls could work (nevermind the EVIDENCE that they don't) and that there are electorates EVERYWHERE stupid enough to elect them.

flacon's picture

It takes a pH Dee to realize the value of price controls. 

notbot's picture

You guys have this all wrong. This is going to turn Argentina into an export powerhouse.

Just ask Krugman, or any other tenured professor.

Pladizow's picture

Its ironic how a country is named after one of the few things that could help save it!

YBNguy's picture

I'm guessing Argentina's Madam Prez never saw this...

Why price fixing fails:

Half_A_Billion_Hollow_Points's picture

meanwhile... twenty USDs won't buy you a single fucking bitcoin...

strannick's picture

Supermarkets get price controls while everyone else gets finflation. How nice for food producers. Empty shelves soon to follow, as food producers might not like subsidiznig governmental sstupidity and getting to be the paper mache happy face put on Argentians gargoyle economy. Well done Kirshner the progressive! Socialism is great til you run out of other peoples money. These @#$% progressive academics should have to successfully manage a 7 11 before they are given the keys to the economic kingdom. Far different view at street level than from up in the ivory tower.

disabledvet's picture

ponzi schemes can't survive the deflation. that's the lesson of Charles Ponzi, the lesson of Bernie Madoff. These clowns always have "some new interest rate product to sell." What they don't have an answer for is "prices decreasing." that means cash money itself is hoarded and people want to know "what your business is." in the case of say..."gold mining" would appear "very expensive rock farming." So Argentina is bouncing checks using its cash to do so. They don't call it fiat for nothing. People in Argentina running out and buying a boat load of canned goods says to me "these people need to get a life." Be like a good Bostonian and "buy a cow." that's why they had/have all those "commons" in Massachusetts. "So the cow would have some food." Don't even get me started on the road system.

GetZeeGold's picture



I only buy the best......of course I have to go to the black market to get it.


Pure Evil's picture

What most of you have failed to realize is that this is the best way to reduce the number of blubber butts right here in America.

Make food unaffordable!


(notice how the letters lean forward, ha ha, genius!)

TwoShortPlanks's picture

No, shelves won't be stocked...unattainable!

Lore's picture

Can't remember the specific good we were talking about, but I once had a conversation with a guy at the local coffee shop about some union-regulated service, and when I suggested letting markets determine the proper price, he became so angry that he smashed his mug on the floor and looked like he wanted to hurt me.

Socialists are DEVOUT!

EnslavethechildrenforBen's picture

In other words, you want food price controls AND wage price controls for the common man while the Bankers just print themselves Trillions.

Cock sucker.

GetZeeGold's picture



The bankers only do what politicians allow.. Come around tomorrow and we'll take you again.


Please vote for us cause we'll looking out for you. Well not really, but that's our story and we're sticking to it.

Lore's picture

@Enslavethechild: I assume you are NOT addressing me.

@GetZeeGold: Make no mistake: politicians answer to banksters.

Spigot's picture

Most indeedy, Planks. Ah! But the arbitrage. Take ANYthing you get from a now government controlled store and take it to the local community market , charge 25% more.

IIRC over 50% of Argentines work for the government in one form or another, so really this is a means of forcing large private stores to subsidize the buying of government workers.

TwoShortPlanks's picture

Bernanke's final words will be something like: "Ruuuuun...Goooo...Get to da Choppa!"


Rogue Trooper's picture

LOL... inspired me to watch this again.  Change the 'meme' and this could be a documentary!

The They's picture

Hyper-inflation is becomming a national tradition in Argentina

wee-weed up's picture

Hurry in now, customers...

for the 10th Annual Going-Out-of-Business Sale!

SDShack's picture

That would be Europe, specifically the PIIGS.

TheFourthStooge-ing's picture

"Price freeze" is simply a euphemism for shortage imposition.

Imminent Crucible's picture

Glad to hear someone point that out, although the way I would say it is, "The Kirchneristas see food shortages coming, so they initiate price controls so the shortages can be blamed on the greedy hoarding grocery chains."

Half_A_Billion_Hollow_Points's picture

Sure is... 


Also, look how wonderful: Google news on "guns and ammo shortages"

pashley1411's picture

Our stupid President Ford believed in price controls as well; for a few months.    I think its hard to imagine just how far out of it government leaders can be.

bigkahuna's picture

After Nixon caused the USD to shart the bed, Ford had to learn the hard way.

Pure Evil's picture

Well, as a politician, you have to appear to be doing something.

Even if the only thing your doing is shoving your own citizens into gas chambers and crematoriums.

And, with today's technology, you can watch yourself burning to death on flat panel BIG SCREENS.

Heil Hussein!

trav777's picture

i saw negroes in africa with "Mugabe for President" T-shirts too...go fkin figure, even after the guy destroyed the economy and COMPLETELY annihilated the currency, he still has supporters.

People are WTF stupid

TraderTimm's picture

Do you get a rebate for posting racist shit? Just wondering, since you're all white-bread consistent about it all.

Woden's picture

Facts cannot be racist.

As a Brit I hope Argentina remains so broke it can never afford a military to invade the Falklands again. Viva England.

RafterManFMJ's picture

The way England is going, in 10 years Argentina can take the Falklands with 3 guys in a canoe.

TerminalDebt's picture

England will send King Harry and 4 of his hookers to take it back

nyquil762's picture

i saw americans in the United States with "Bush or Obama for President" T-shirts too...go fkin figure, even after these guys destroyed the economy and COMPLETELY annihilated the currency, they still has supporters. People are WTF stupid

nofluer's picture

Obviously Ms Kirchner never heard of Richard M Nixon - who used a "wage and price freeze" (3 months) in 1971? (Going on memory here...).

At the time I was a HS graduate and in the military, and I commented that the inflation would just pile up and cut loose, making up for lost time, after the freeze was dissolved. I was asked by my fellow peons where my economics degree was. I still don't have an econ degree, but I remember what happened when the freeze melted. (Is it TRUE, Daddy? Do you really not need a degree if you have a functioning brain?)

How does that thing go, something about those who can't remember the past being condemned to repeat it?


Go Tribe's picture

What this really says is that bonds will collapse toward worthlessness, companies will not afford growth, and equities will plummet. Another couple of montHs.

Pure Evil's picture

I think you're being way to optimistic about the future.

upWising's picture

"Things are going to get worse, before they get worse."

–Lily Tomlin

Dark Space's picture

See, that's where you wrong. The Dow has skyrocketed since May 2010, you just need to price it in Argentino Pesos... ;)

eduard khil's picture

Any Bersa Thunders left in there?