Rule one: When the price mechanism is vandalized, supplies run short.
Rule two: The vandals will look for a scapegoat.
BUENOS AIRES–A day after reporting the highest inflation in over a decade, Argentina’s government fined several retail chains, including France’sCarrefour SA and U.S.-based Wal-Mart Stores Inc., for failing to stock certain price- capped products.
Commerce Secretary Augusto Costa said, in a presentation to reporters, the government fined Carrefour about $ 167,000 and Wal-Mart around $77,500. The companies were allegedly found to have an incomplete stock of certain products that they agreed to sell at capped prices. Changomas, also owned by Wal-Mart, was fined about $41,000. Other local retail firms were also fined.
Last month, retailers agreed to freeze the prices of around 200 basic goods–ranging from detergent to milk to condoms–to fight inflation that economists say likely surpasses 30% annually. At the time, retailers said the agreement could lead to supply problems if manufacturers of certain goods curbed production of products that yielded little or no profit or, in some cases, directly led to losses.
Carrefour and Wal-Mart couldn’t be reached for comment.
The fines come a day after Economy Minister Axel Kicillof announced a change in the methodology to measure price increases and reported that consumer prices rose 3.7% in January from the previous month. This was the first time in seven years that the government has acknowledged that the country has high inflation. For years, the government said that annual inflation totaled around 10%–a number so implausibly low that it led the International Monetary Fund to censure Argentina and order a change in methodology to calculate key indicators accurately.
The fines also come a week after political activists allied with the government plastered this capital city with poster-size photos of retail executives accusing them of fueling inflation by raising prices. The posters featured portraits of executives from the local units of Wal-Mart, Carrefour and other companies. “These are the people who steal your salary,” the posters said. “They raised the price of everything to take your money.”
Anyone wondering where this could lead only needs to look north, to Venezuela, but there are plenty more “pivotal experiments” to choose from . . .