The discretionary pricing strategies of the oligopolies that make up the Argentine supermarket sector don’t have a significant effect on inflation, it seems. But the power of the chains, coupled with high costs of distribution passed on by transport unions in a distorted supply chain, means that even though farmers are paid little for their produce, consumers can end up being charged as much as 10 times more for a product when they pay at the till.
According to Euromonitor International, in 2013 Argentina’s three largest supermarkets shared 40 percent of the market. Regardless of who measured inflation that year — other than the INDEC statistics bureau, which was the subject of government intervention — the number was above 20 percent.
The same source, in addition to World Bank data, shows that the concentration of supermarket ownership in Chile was higher than in Argentina in 2013 — the top three firms in the neighbouring country accounted for 45 percent of the market — but inflation clocked in at 1.8 percent. Similarly, in Mexico, where the largest three companies held 35 percent of the market that year, inflation registered at 3.8 percent.
Miguel Ángel Boggiano, a behavioural finance professor at San Andrés University, who collected this data, added another point of comparison for the Herald: “In Europe, you generally find the concentration of supermarkets at 80 or 90 percent, and inflation at an average of just three percent.”
But although grocery retailer concentration and profit margins don’t seem to cause inflation at the macro-level, a significant issue that plagues the Argentine economy is the meagre sum paid to small- and medium-sized suppliers in the food industry, whose products are sold by large supermarkets after seemingly excessive markups.
