Argentina's high inflation makes peso pricey, flips border shopping

The 12-month cumulative inflation was 33.3% in Argentina (IPC – INDEC) and 4.22% in Brazil (IPCA – Central Bank). Inflation is the change in consumer prices over a year. In addition, the bilateral real exchange rate index Argentina–Brazil (BCRA, base 2015 = 100) stands at 93. An index below 100 indicates that, in real terms, the peso is stronger than the real, meaning goods priced in pesos become more expensive when converted to reais or dollars.

Even with soaring inflation, the peso appreciated against the real because the real exchange rate index already incorporates the purchasing-power difference between the two countries. The result is that, despite internal Argentine prices rising, the cost of buying in reais or dollars at the border became lower than the price of the same products in Argentina. Hence, the shopping flow reversed: Argentines now cross to Foz do Iguaçu, Brazil, and Ciudad del Este, Paraguay, in search of better prices.

For travelers at the Triple Frontier, this means that the choice of currency and shopping location can significantly affect the budget. If you are Argentine, it is worth taking reais or dollars and checking exchange rates at border exchange houses. If you are Brazilian, you may find cheaper products in Paraguay, but remember the US$ 500 allowance for overseas purchases and import restrictions. The data come from Marco Três, with official sources from the Central Bank of Brazil, INDEC and BCRA.

What this means for you: If you are planning to shop at the border, compare prices in reais and pesos before you go. Argentines should exchange reais or dollars before crossing to ensure the best cost-benefit; Brazilians can take advantage of the favorable peso rate to buy electronics and clothing in Ciudad del Este, Paraguay, but stay aware of the duty-free limit and baggage controls.

Read also: Where to exchange money at the border and where the real is accepted