Javier Milei is the new president, supermarkets double prices

As Clarin notes, this Monday food and consumer product companies got rid of the last constraints deriving from the agreements concluded with Sergio Massa's government and began sending new price lists with the related increases.

On average, it is estimated that manufacturers will apply increases of between 20 and 25 percent on items that were within the price controls in supermarkets to match shelf values ​​with those of the same products in Chinese warehouses or self-service stores. official controls never arrived.

Food rose an average of 8.2% last week, according to preliminary data maintained by EcoGo. This is the highest value ever recorded by the consultancy firm, which predicts a monthly increase of 28% for food consumed at home and 23% for inflation in general.

The problem is that talking about thedollarisation of the economy is easy, implementing the measure a little less: to switch to a payment in dollars you need to have the dollars to convert the circulating Pesos, and this certainly explains Milei's preventive trip to Washington. However, the transition will still see an explosion in prices in Pesos precisely because this will be perceived as worthless.

The least harmful move would be to set an exchange rate now and respect it, in order to immediately calm its devaluation. The risk of the freeze, however, risks crowding out domestic production in favor of imported products, especially if inflation does not stop instantly. A bit like the effect that was produced with the previous dollarization and which led to its abandonment.

Then what exchange rate for the dollar? Because sooner or later a value will have to be set, at least for bank account conversion operations. If it is devalued too much it will create inflation, if it is revalued too much it will send the trade balance into a tailspin.

A cure that accompanies the introduction of the dollar (therefore a sharp and brutal compression of prices and internal margins) and that occurs simultaneously with a policy of strong privatizations will lead to a shock that, politically and socially, can only be tolerated with a strong popular support. Milei has strong support because he presented himself as harshly anti-system, but now he is moving on to govern and his cabinet, for example, has included Luis Caputo, an economist who has already held political positions and with the liberal Macrì government, he worked on central bank and with JP Morgan. Certainly a good technician, but not a revolutionary figure.

Will Milei be able to maintain popular support to implement his reforms, or in three months will we see the people in the streets and him fleeing by helicopter, as his predecessor Fernando De La Rua did in 2001?