How a rumor set Argentina’s cigarette price soaring

People in Argentina have endured double-digit inflation for the last few years and have developed various coping strategies. One such tactic, known as estoqueo, or stocking up, consists in buying basic non-perishable goods in bulk. Filling the pantry with cans of food, cleaning products and toilet paper for six months means saving up to 20 percent when there is a shortage.

Smokers throughout the country followed the same logic on December 31 as a rumor that the price of a pack of cigarettes would rise by 40 percent on January 1 began to do the rounds.

The rumor spread among news stand owners and took off after several distributors reduced available stock in the capital and in Buenos Aires province. In light of such high demand, one vendor chose to raise prices, another rationed packs and one refused to sell, hoping to take advantage of higher prices on the first day of the year: three different strategies in the same neighborhood.

Similar scenarios played out across the city. “I don’t know at what price to sell it to you,” one vendor was heard saying to a customer who was walking up and down the street in search of a place to stock up on cigarettes on the last evening of the year.

“I can only sell you one pack,” said some of those vendors who opted to maintain prices at 50 pesos (around $3.10) for a pack of 20 cigarettes. “Two per person,” offered some more generous sellers including gas stations. Outside the capital, especially in smaller cities and towns, vendors agreed to raise prices and the cost of one pack of cigarettes rose by up to 70 percent to the equivalent of $4.30.

On January 1, a holiday, there was no official increase but few kiosks were still selling at the original price. Most had chosen to jump on board the speculate train and raise prices by 40 percent. By January 2, the first business day of the year, distributors continued to hold prices steady and small vendors had to slash their prices. Some sellers even gave a rebate to customers who had bought cigarettes at much higher prices days before.

What would have caused outrage in other countries is just another anecdote about how people in Argentina grapple with a 41-percent annual inflation rate every day.

English version by Dyane Jean François.