By Horacio Soria and Lucinda Elliott
MONTEVIDEO (Reuters) – Uruguayans are crossing into Argentina to shop for cheap food and fuel in their economic crisis-hit neighbor, but the trend is plunging businesses near the border into a crisis of their own.
Uruguayan supermarket manager Noelia Romero said that sales were falling fast as her customers increasingly make day trips to Argentina to look for bargains.
“We’ve been hit hard in terms of groceries and cleaning products,” said Romero. She works in the town of Fray Bentos, separated by the River Uruguay from the Argentine city of Gualeguaychu, which is easily accessible by bridge.
Argentina is battling inflation of over 100% and a weak peso currency, that has shed around a quarter of its value against the dollar this year despite strict capital controls that slow its fall. In Uruguay annual inflation is running at 6% and the local currency has broadly strengthened against the dollar.
This ongoing economic crisis is creating a conundrum for border towns that Argentina shares with Bolivia, Chile and Uruguay because they are unable to compete with Argentine prices, often only a short distance away.
“Over there in Uruguay fuel costs seventy pesos ($1.58) per litre and here in Argentina we pay twenty pesos ($0.53), so it is much better for us,” said Robert de Lima who had traveled less than 45km to Gualeguaychu from Uruguay.
High levels of unemployment and bankruptcies have been reported in border towns, forcing Uruguay’s government in May to introduce economic measures to help protect merchants. These included some tax exemptions and discounts on petrol and medicines.
Uruguayan President Luis Lacalle Pou has recognized there is a problem with prices in Argentina being so low, with demands from regional governors for his government to implement a temporary import tax on foreign goods carried across the border.
Abelardo Alzaibar owns a pharmacy in Fray Bentos and said that even with the incentives, the price disparity is creating “tremendous” issues for the survival of local businesses.
“There are businesses closing, shops in debt and evidently no sign of this ending soon,” he added.
(Reporting by Horacio Soria and Lucinda Elliott; Editing by Alexandra Hudson)
