Inflation and “Deflation” in Buenos Aires

Our friend Martin Frankel from Areatres posted two menus on Facebook that showed the prices of the same restaurant from Summer 2007 to Summer 2013. In 6 years you can see exactly how crazy the inflation in Argentina has been – a roasted chicken went up a whopping 445%, a liter of beer went up 600%, and a soft drink increased 782%! That’s well over 40% per year!

Things look a bit more positive if you look at prices in dollars. That chicken in 2007 was U$S 7.01 and in 2013 was U$S 12. That’s only a 71.18% increase in 6 years. Unfortunately most people do not earn in dollars and no one here is seeing 50% per year increases in their salaries. The peso simply has less and less purchasing power.

Seeing these menus got me thinking about our recent trip to Benihana for their menu ejecutivo (lunch special). This has been one of my favorite deals in the city, and since I wrote about it in 2010, I figured I should do a comparison to the 2013 prices.

Restaurant Inflation in ArgentinaLooking back to August 2010, the price for the lunch special was $45 pesos. In December 2013, the price for the lunch special was $75 pesos – a 67% increase in three years. That’s pretty good, right? It’s only about 30% per year, which is in line with the unofficial inflation estimates here.

Not so quickly though.

Unfortunately, Benihana is also practicing another common Buenos Aires trick – “deflation.” That is, what’s being offered and the portion sizes are being significantly decreased as well. For example, in 2010, that $45 peso lunch special included:

  • miso soup
  • ginger salad
  • steak or chicken
  • tempura shrimp and vegetables
  • 3 pieces tuna
  • 2 pieces white fish
  • 4 piece roll
  • rice
  • unlimited refills of a soft drink
  • ice cream

The 2013 lunch special for $75 pesos included:

  • miso soup
  • ginger salad
  • steak or chicken (smaller portion size than 2010)
  • tempura shrimp and vegetables
  • 5 pieces salmon (no tuna or whitefish)
  • 4 piece roll
  • rice
  • one soft drink (can with no refills)

So now we get a smaller portion size, no tuna or whitefish, no free soda refills and no dessert. I can forgive them on the red tuna as that is impossible to find here, but the other missing and smaller items decrease the value of this offer (though it is still a pretty good deal). If you wanted to add a half portion of ice cream, that’s an additional $25, bringing the total for lunch to $100 – a 122% increase.

In dollar terms, it’s a whole other story. That $45 pesos lunch special in 2010 would have cost you U$S 11.40. The 2013 lunch special with the added ice cream for $100 pesos? That would have only cost you U$S 10.52 (at a blue rate of $9.50). Yes, it’s actually cheaper, but this assumes you have dollars and are exchanging them at the unofficial rate.

Now, I’m not trying to call Benihana out here. I just happened to have them as an example. Reducing sizes and what is offered is a pretty common tactic in Argentina to help keep prices down. Have you seen any other examples? Let us know in the comments.

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