Monday, October 2, 2023

The record increase in a key cost factor amid soaring inflation

The shooting of 12.4% Inflation in August was mainly caused by the rise of food and drink but also due to the record-breaking escalation of important costs for all productive and commercial activities.

In August, Freight transportation costs rose 20.3% compared to July, the highest fluctuation in 21 years. This is reflected in the strategic index created by the Argentine Association of Motor Transport Companies loads (FADEEAC).

According to this cost index, you have to go back to May 2002 to see a similar increase: that month, as Argentina tried to calm a severe economic crisis, transportation costs were up 18%.

Now the scenario is even worse: in the first eight months of the year, transport logistics costs rose by 92.5%, in the last twelve months the increase reached 149%.

FADEEAC President Roberto Guarnieri stated: “I have never experienced anything like this and this context hits us hard because it hits us at a time when we have been reeling for many years after the pandemic, fuel shortages and drought.”

“I have not yet started collecting the tariff with the 20% increase and it will take 40 days to collect this increase and if we collect it we will lose again,” the transport operator complained.

Guarnieri warned against this “There are a lot of business people in the industry who are being put out of business and there are fewer trucks on the road because the smaller crop has wreaked havoc, and there are business people whose truck broke down and had to work as drivers.”

He explained that “the larger companies that had better stops pass the road, but those that have few trucks and are not well armed stay on the road.”

The cost of fuel rose the most, at 18%, and the price of bulk or wholesale sales, used in most industries, saw an increase of about 35%, while the cost of tires saw a rise of 1.5% 24%.

“Before, you had to buy at least one axle (four tires), and today you need more than a million pesos to change these four wheels,” explains Guarnieri.

Nation World News Desk
Nation World News Desk
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