International reporting
In Argentina, the credit rush in the face of inflation
Audio 02:29
In Argentina, the use of purchases in installments is spreading more and more in the face of the inflation that is affecting the country.
© Théo Conscience / RFI
By: Théo Conscience Follow
3 mins
While inflation is racing in Argentina and reaching 64% over one year, the use of credit has increased sharply in recent months.
To try to get ahead of the rise in prices, Argentines anticipate their purchases and spread their payments over several months, whether to pay for a car, a pair of sneakers or shopping at the supermarket.
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From our correspondent in Buenos Aires,
The red soft toy for Lucía, the blue for Lila.
A board game for both.
Total: 5,125 pesos, or around 15 euros, which their grandmother Betina pays by bank card in three interest-free installments.
“
As far as possible, I buy everything on credit.
Whether it's household appliances or food, I pay in installments whenever I can
,” she admits.
It's true that in Argentina, it's often advantageous to spread out the payments, explains his daughter Gisela: “
When you buy in installments, you pay as the months pass.
And since inflation is rising all the time, the final installments are much smaller
.”
A government program to encourage consumption
Since the beginning of the year in Argentina, monthly inflation has regularly exceeded 5%.
This means that the real value of the next Betina installment will be 5% lower than the first one.
The toy store also benefits from this by inflating sales volumes, explains manager Paula Villalba: “
Out of ten sales, eight are split.
People spend more if they can pay in instalments, so that's a benefit for us too.
»
An incentive for consumption which is even the subject of a government policy.
The “Ahora 12” program spreads payments over 6, 12 or 24 months for durable consumer goods produced in Argentina.
But in these cases, paying cash usually offers benefits.
“
When you enter a business, you are offered to pay cash with a reduction of 20
% for example, or to pay in 12 installments.
And that's usually where people hesitate and don't know what to choose
,” notes Ariel Diaz.
Worsening inflation
After studying economics, Ariel Diaz developed Infleta, an online calculator that compares the cash price for a given product in several installments, taking into account inflation forecasts to find out which is the most advantageous.
“
We Argentines know that our currency is devaluing from month to month.
Our salaries are adjusted for inflation,
he says.
For me, for example, it's every three months.
This means that settling a
10,000
peso due today is more difficult than settling it two years from now.
In other words, in two years, with these
10,000
pesos, I will not be able to buy as many things as today.
»
If payment in installments is a widespread practice among the middle class, many people remain excluded.
In Argentina, a third of the active population belongs to the informal sector, and nearly one person in four lives below the poverty line.
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