Consumption improves in July but still struggles to recover

The story in July saw a 4.2% rise in consumer spending, yet retail sales have not returned to pre-pandemic levels. Compared to July 2025, sales decreased by 2.6% year-over-year, with a larger total decline of 2.9% for 2026, according to the Scentia survey. Two sectors, pharmacy and e-commerce, showed improvement. Pharmacy saw a 0.2% increase, while e-commerce surged 35.6% year-over-year.

E-commerce is the fastest-growing retail sector, with a 40% year-over-year increase in July alone. The Milei administration attributes the retail sales decline to changing consumer habits, not a drop in purchasing power. However, e-commerce's contribution to total commerce remains modest, representing about 8% of domestic demand.

Consumer trust is declining, as evidenced by the Consumer Confidence Index (CCI) falling 1.1% month-over-month in August, marking two consecutive declines. The CCI stood at 40.2 points in August, similar to levels seen in May, and only 1.5% above its April low. This drop in consumer confidence follows the unexpected defeat of Milei in the local legislative elections in Buenos Aires Province.