Argentine Retail Sales Drop 3.8% Year-on-Year in July

Argentine small and medium-sized businesses experienced a significant downturn in retail sales in July, with a 3.8% year-on-year drop and a 2.1% decrease from June, according to the Argentine Chamber of Small and Medium Enterprises (CAME).

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The decline in the year-on-year measurement was due to the exhaustion of the extraordinary liquidity provided by the mid-year bonus in the previous month.

The entidade attributed the slump to a combination of factors. The boost from mid-year bonuses had faded, and households faced higher winter utility bills, leading to increased caution among consumers. This resulted in a 2.7% cumulative decline in sales for the first seven months of the year.

The downturn affected nearly all sectors. Textile and apparel sales saw the sharpest decline at 5.6%, followed by home furnishings and furniture at 5.5%, and food and beverages at 5.4%. Only hardware, electrical materials, and construction materials sales showed growth, increasing by 1%.

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The absence of this temporary driver, combined with the greater incidence of winter service tariffs on the family budget, deepened consumer caution and slowed the general pace of activity.

Online sales, however, grew by 14.9% compared to July of the previous year, though they slightly decreased by 0.1% from June. CAME noted that persistent loss of purchasing power and rising utility costs forced consumers to focus on essential goods, postponing purchases of durable items and clothing.

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The persistent loss of purchasing power, aggravated by the incidence of service tariff costs during winter on the family budget, led to defensive and fragmented demand.

Businesses also faced squeezed profit margins due to rising replacement costs, logistics expenses, and competition from informal and imported goods. Many sales continued to rely on bank promotions, digital wallets, and cash discounts as consumers' credit limits were saturated.

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Businesses faced a compression of their profit margins due to constant increases in replacement costs, rising logistics expenses, and pressure from informal and imported competition.