Relative Prices in Argentina Predict an Exchange Rate of 14.3 Pesos per Dollar

November 9, 2015

Policymakers in Argentina are likely to remove restrictions on the foreign exchange market in a month. If this happens, will the official exchange rate, which currently is 9.6 pesos per dollar, increase to match the unofficial black-market rate, currently at 15.7 pesos per dollar?

One way to answer this question is to look at the current level of relative prices between Argentina and the US. The PriceStats PPP index computes the cost of an identical basket of hundreds of products in categories such as food, fuel, and electronics in both countries. We can use it to calculate an implied exchange rate by taking the ratio of Prices in Argentina / Prices in the US. We call this the “PPP Exchange Rate” and plot it below together with the official and unofficial (“Blue”) market exchange rates (pesos per dollar).

The exchange rate implied by relative prices is currently 14.3, much higher than the official rate and a bit below the unofficial exchange rate. The last time the official rate was adjusted, in January 2014, it depreciated to exactly match the exchange rate implied by our relative prices. The current data therefore suggest that removal of exchange controls will likely depreciate the official rate significantly but not necessarily lead to higher prices, at least for the tradeable goods included in our basket. Those prices have already adjusted.

Argentina’s Nominal Exchange Rates
Official, Unofficial, and PriceStats (2011-2015)
Values are in pesos per dollar

PPP Exchange Rate |
Unofficial Exchange Rate |
Official Exchange Rate

TV Prices Drop After the Super Bowl

January 30, 2015

If you are interested in buying a TV, wait until after the Super Bowl. According to our 2014 data, the biggest price drops of TVs are seen after the Super Bowl. Last year’s trend suggests that TV prices drop mid-January and remain stable until Super Bowl Sunday. After that day, prices start dropping significantly. For 2015, prices of TVs slightly decreased during the first half of the month, but we are expecting the big drop to happen after February 1st. This behavior is stronger with bigger screen sizes.

Daily Average TV Prices
In US Dollars (January & February | 2014 & 2015)

2014 |
2015 |
Super Bowl

Thanksgiving Weekend is the Best Time to Buy Presents

December 4, 2014

Should you buy during the Thanksgiving weekend or wait until Christmas? You don’t need to wait. Our Recreation & Electronics Inflation Index, which includes products such as personal computers, cameras, TVs, toys and video games, typically reaches its lowest point for the holiday season between November 26th and November 30th. This coincides with the dates for Cyber Monday and the special sales that come along with it as businesses adjust to the intense competition of the holiday season. Additionally, prices for existing items tend to fall around this time as new items and gadgets get added to retailer websites at full price.

Learn more about this in Alan Flippen’s article in The New York Times.

US Recreation and Electronics Inflation Series
Daily Index (Holiday Season: 2012, 2013, 2014)

2011-12 |
2012-13 |
2013-14

The Thanksgiving Meal is Still Cheaper Than in 2012

December 1, 2014

For several years PriceStats has measured the cost per person of a typical Thanksgiving meal, including turkey, stuffing, rolls, cranberries sauce, gravy, apple cider, various sides such as mash potatoes, sweet potatoes, green peas, and desserts like pumpkin or pecan pie.

According to our series, the average cost of this year’s meal per person has been $7.27. This represents a 50-cent increase from last year’s average cost of $6.77. The inflation in the Thanksgiving basket has been 7.4%, a much higher rate than the 2.5% aggregate inflation for the overall Food and Beverages sector. However, even though the cost has risen from the 2013 value, it is still lower than the 2012 average cost of $8.04 per person. This trend matches the results from the American Farm Bureau Federation’s annual informal price survey of a Thanksgiving feast.

Thanksgiving Meal Cost Per Person
In US Dollars (2012, 2013, 2014)

2012 |
2013 |
2014 |
Thanksgiving Day

Krugman Highlights Differences Between PriceStats and Official Inflation Figures in Argentina

November 17, 2014

“Argentina really does seem to have much higher inflation than the government admits” said Paul Krugman in his latest blog post about Argentina and the difference between our inflation series and the official ones.

With an annual inflation close to 40%, Argentina is about to close 2014 with its highest annual inflation rate in the last 20 years. As the inflationary process continues, the gap between our series and official statistics has been 14% on average in the last 5 years. This is the largest gap in our current data set for 22 economies, where the average difference has been 0.4%.

PriceStats Argentina Aggregate Inflation Series
Annual Inflation Rate (2008 – 2014)

Official Annual |
PriceStats Annual