Argentine price freeze affects Chilean business

Argentina freezes costs of goods on stores, including Chilean companies.  

In efforts to combat the countries’ increasing inflation rates, Argentine President Cristina Fernández established a nationwide price freeze that will affect around 70 percent of supermarkets and home appliance stores.

Major Argentine supermarkets to freeze prices until April. Photo by Ever Daniel Barreto Rojas / FlickrThe freeze will last two months and applies to all major supermarkets, including several international companies. The Chilean companies Falabella, Sodimac, and Cencosud complying with the freeze do millions of dollars of business in the country.

Some critics of Kirchner’s economic policy say the freeze could lead to food shortages in Argentina and even black market sales of products.

“Price freezes mean no profits for sellers or even losses. Who will import food under these conditions?” said Paul Gregory, an economics professor at the University of Houston.

The freeze is bad for Argentina and bad for Chile, he added.

“Obviously, price freezes in Argentina will depress food imports. Freeze means nothing good for Chile,” Gregory said.

Argentina is Chile’s fourth largest importer and companies like Falabella and Sodimac, who will both freeze their prices, do significant business there. Combined, the two companies have 18 stores in Argentina that will be affected by the freeze. Falabella’s third quarter earnings in Argentina alone were US$196 million in 2012.
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