I remember as a kid the time when chocolate bars jumped from a quarter to 50 cents. It seemed like the price went up without reason, and with it my life changed. I was too young to know about economics. But it was easy to figure out that I now needed twice the coins to buy a Baby Ruth or a pack of Reese’s Peanut Butter Cups in my home town of Los Angeles.
Inflation is again pulling the rug out from under my life. I live in Argentina and inflation here is like water. You’ve always got it. And it can rush. Inflation was steady between 1975 and 1991, and went hyper several times, the last in 1990 before the government could get things under control. It did so with policies that largely wiped out local industry. The peso was tied one-to-one with the U.S. dollar and inflation turned into deflation. But shopping got as expensive – or more expensive – than in London and New York City. I saved my money to shop on my trips to Los Angeles and Europe, filling suitcases to take home to Buenos Aires. I got more for my money outside of Argentina.
Then came the hallelujah years, at least for my wife and me. An economic crisis and 70% currency devaluation in 2002 made Argentina much cheaper for anybody earning in currencies other than the peso. I could buy more for my dollars – much more. My wife and I didn’t break out the champagne. We didn’t splurge. I don’t like champagne or glamour or too much shopping. I like more down-to-earth eateries. We’d order two meals from a hole-in-the-wall where we were living at the time in Caballito in the center of Buenos Aires for nine pesos. It was enough to fill our guts and it cost less than the equivalent of US$3.
But the hallelujah years ended and our spending power weakened. Prices have risen so much that once again it is the same or cheaper to shop in Europe and the U.S. Rents may be lower here as are utilities and gasoline, but the rest is way up. I remember going to England in 2008 and buying a pizza for 11 pounds, or the equivalent of about 70 pesos at the time. That was way more than the 20-24 peso average at the time in Buenos Aires. No longer, though. It’s expensive and we’re reeling. As a freelance journalist, my money is made on the trot. There’s no monthly check. I have to sell and write. And my pay-per-word and story hasn’t risen at the same pace as inflation over the past years. It’s different for many in Argentina. Salaries are up, pushed higher for some by union strongmen and others because well, boss, inflation is killing me. Wages are rising and demand is on the up. So too are prices. Complain? Yeah, people do. But this is Argentina and inflation is like water. So they get on with it and try to find ways of making the most of the situation. That means, at least for now, it’s better to spend than to save. Inflation will eat up your savings in the bank. And at the same time it will push up the value of your car. So shed those pesos and buy. Plasma TVs, washing machines, dishwashers, cups, houses, quad bikes and a holiday home. Stop saving and spend. Borrow, take out a personal loan. Buy on credit and in three, six and even 30 monthly installments, some of it interest free. Join a loyalty club and get discounts for your spree. That’s the attitude. At least for many. We’re not going for it. We’re crimping. It’s not because we’re tight (well, we are). It’s because we’re a growing family. My three children – all under eight – can polish off a box of cereal in two sittings. And those two dozen apples you bought the other day? They’ll be gone in two or three days.
Where will all this lead? I’m thinking credit problems, faster inflation and banks with limited savings. But this is Argentina so it could go any way. So suck it up and bite that lip when you buy a pizza that a couple of years ago cost 24 pesos. Now it costs 95 pesos, or US$24. This is high season for tourism on the Argentine coast in Pinamar, where we are spending the summer. Prices are inflated by even more and so we are sucking it up. And we’re stretching the pizza out to two meals – and planning to make our own next time.