No One Ever Learns: The Argentine Price Freeze

Argentina has ordered a price freeze on food products to last until April 1. The price freeze applies to the largest food retailers, which account for seventy percent of the market. It follows a day after the IMF censured Argentina for its manipulated statistics, most importantly its gross underreporting of the inflation rate.  Customers have been urged to keep cash register receipts as proof  if the largest retailers violate the freeze order. 

 

The results are predictable. Market demand will spill over to small retailers who cannot satisfy the demand for food products. Their prices will rise, and there will be two quite different prices of the same food products. Customers of large retailers will stand in line hoping to buy at the frozen price. There is no assurance that there will be anything to buy when they get to the front of the line. Outside Wal-Mart, Carrefour, Coto, Jumbo, and Disco stores, black market sellers will offer customers goods at much higher prices.

go to forbes.com