Consumption improves in July but still struggles to recover

The debate between the government and the opposition over the decline in purchasing power and low retail sales entered a new chapter on Friday. A private report showed that, while consumer spending in July showed a 4.2% monthly increase, sales have yet to recover to last year’s levels. Year-over-year, sales are down 2.6% compared to July 2025, while the accumulated drop for 2026 was 2.9%. The data comes from a survey conducted by the private consulting firm Scentia, one of the few firms that tracks consumer spending trends on a monthly basis. Only two sectors have shown improvements compared to 2025. One is the pharmacy sector, with a modest 0.2% increase in the first seven months of the year. The other is e-commerce, with a significant 35.6% jump compared to January–June of last year. E-commerce takes a leap E-commerce is the fastest-growing sector within the retail industry. In July alone, it saw a 40% y-o-y increase. A report released this week by the Argentine Chamber of E-Commerce (CACE) estimated that purchase orders increased 21% y-o-y, while order volumes rose 22% in the first half of the year. This growth has led the Milei administration to repeatedly assert that the decline in retail sales is the result of a shift in consumer habits rather than a decrease in purchasing power. There are business leaders who share this theory, most notably Mercado Libre founder Marcos Galperín, who shares the president’s political and economic views. The CACE itself, however, acknowledges that e-commerce’s impact on total commerce is still very small, clarifying that e-commerce in Argentina accounts for approximately 8% of total domestic demand. “Is that enough to turn demand around? No,” said Andrés Zaied, president of the Argentine Chamber of E-Commerce (CACE), during the presentation of the data on Thursday. “We need much greater growth to be able to offset declines on the other side,” he added. Consumer trust continues to drop This stagnation is increasingly reflected in public opinion polls and surveys. One of the indicators most closely monitored by the establishment is the Consumer Confidence Index (CCI) compiled by Di Tella University. In August, it fell 1.1% month-over-month, marking the second consecutive decline following the sharp 4.8% drop recorded in July. With this change, the index stood at 40.2 points, at levels similar to those seen in May. “It is only 1.5% above its recent low in April,” noted brokerage firm Portfolio Personal Inversores They also noted that this figure is “very similar” to the level the ICC reached in September of last year following the local legislative elections in Buenos Aires Province, where Milei suffered a surprising defeat. Another point they highlighted was that perceptions of personal circumstances deteriorated by 3.1% compared to last month, while the willingness to purchase durable goods and real estate fell by 4%.