Wage recovery has stalled and consumption remains unresponsive: what analysts predict

The wage upturn that had begun to emerge at the beginning of the year quickly faded in the face of rising prices . After a series of months with collective bargaining agreements below inflation , real incomes fell again, and the recovery in consumption was put on hold.

According to a report by Fundación Capital, between January and April, registered private sector wages fell 1.9% in real terms, while the Consumer Price Index accumulated a rise of 11.6%. In March alone, nominal wage growth was 2.2%, compared to inflation of 3.7%, which represented a real loss of 1.5%.

Martín Redrado 's consulting firm anticipates that, even with an optimistic scenario, real wages will remain at levels similar to or lower than those of the end of 2024 in the second half of the year. While some collective bargaining agreements have managed to exceed the 1% monthly rate suggested by the government, the impact remains limited compared to core inflation, which remains around 3%.

The month of April continued the trend: with inflation at 2.8% and agreements still delayed, revenues again lost ground. "The partial improvement that was hinted at at the beginning of the year failed to sustain," the consulting firm summarized.

The deterioration in wages has a direct impact on consumption, which still shows no signs of sustained recovery. According to Nielsen IQ, mass consumption fell 1.6% in the first quarter, with slight improvements in hygiene and personal care, but without a general rebound.

"Consumers are prioritizing essentials and are increasingly rational in their spending," they stated. In this context, promotions are the only tool currently sustaining sales.

In fact, 91% of supermarket categories were sold at some level of discount. For cleaning products, the percentage reached 100%; for cosmetics, 94%; and for food, 91%. This phenomenon was clearly reflected during the Hot Sale: more than 11 million units sold and a record turnover of $66.765 billion.

The differences between sectors are also widening. While higher-income households are leading the recovery with spending on durable goods, tourism, and services, lower-income households continue to spend more than 30% of their income on food and beverages.

"The outlook for the remainder of the year shows a conditional improvement. The rebound is there, but it's partial, uneven, and far from consolidated as a change in trend," Nielsen concluded.