A new survey carried out by the Chamber of Clothing shows that increases in naphtha, in rates and in light, will be the main factors that will affect the clothing. In April there was a year-on-year increase of 43.8% in the value of naphtha, the main determinant of logistics costs.
On the other hand, the interest rate with which SMEs are financed in current account stood at 35.7% per year, thus inflating the financial costs. Meanwhile, electric power increased by 67.5% in the City of Buenos Aires during the last year, according to the Statistical Institute of the City.
Apparel sales reflect a different behavior according to the marketing channel analyzed. . The most important, retailers, recorded sales drops of 2.8% in March 2018 compared to March 2017, according to the CAME. The second channel, the sale of clothing in shopping malls of the City of Buenos Aires and the Buenos Aires Conurbation, showed a recovery of 3.5% in February 2018 compared to the same month of 2017, according to INDEC. In the same period, sales of apparel and textile products in supermarkets throughout the country showed a rise of 15.1%.
The future evolution of clothing consumption will depend on what happens with the purchasing power of the population. The inflationary acceleration of the first months of the year led to a 1.4% drop in the real wages of formal workers, according to the Statistical Institute of Workers (IET). Thus, the result of the race between prices, rates and salaries will be decisive.
In this context, the recent increases in public services tariffs seem to have affected the consumer confidence, which fell 8.5% in April, according to the survey conducted by the Universidad Torcuato Di Tella. With respect to April 2017, the fall is even greater: 13.2%.
Clothing prices increased by 17.4% in March 2018 compared to the same month of the previous year, according to the INDEC. This rise is positioned one step below the general level of inflation of 25.4%, according to the INDEC itself.
The cost pressure occurs in a scenario of growth of clothing imports: during the first quarter of the year, the year-on-year rise was 12.6% in dollars and 25% in tons, according to INDEC. The average price of clothing imports showed a 10% drop. The real exchange rate with China, the main origin of imported clothing, showed a rise of 16.1% in March 2018 compared to the same month of 2017, according to the BCRA.
On the other hand, clothing exports fell 1.4% in the first quarter of the year compared to the same period of 2017, according to INDEC's customs records.
Faced with the drop in clothing consumption and the increase in imports, the national production of clothing fell 2.1 Year-on-year during the fourth quarter of 2017, the latest data available in INDEC. In this way, the year 2017 closed with a fall of 5.7%, which was added to the fall of 2016 of 11.7%. In combination, the Argentine manufacturing of garments decreased by 16.7% during the last two years.
The reduction of industrial production had repercussions in the loss of salaried jobs registered in the Social Security. According to the latest data available in the Ministry of Labor, between the third quarter of 2017 and the same period of 2016, 4,055 posts were lost, a figure that is equivalent to a reduction of 8.5% in the staff of our industries.
Finally, for all 2018, the consensus of market expectations estimates an economic growth of 2.5%, according to the Central Bank survey.