A heated debate erupted on social media and in the press after a diner at the Angelmó market posted a complaint about his bill, which came to 162,000 pesos. One of the most striking items on the bill was the price of the seafood paella, which cost 18,000 pesos. Regardless of any irregularities that the establishment may have committed, such as not displaying prices—although it appears that they were not requested—or not providing a receipt, I am interested in analyzing the reasons why a popular local dish can cost almost 20,000 pesos.

During the week, we learned that January's CPI rose 1.2% compared to the previous month, which was well above expectations. As a result, year-on-year inflation reached 7.7%, a variation not seen since November 2008. Of concern was the increase in core inflation (particularly the CPI excluding volatile items), which also rose 1.2% month-on-month. When we look at the divisions, the highest monthly incidences were observed in transportation (0.395 percentage points) and food and non-alcoholic beverages (0.330 percentage points). Restaurants and hotels also had a significant impact, reaching 0.110 percentage points. If we omit the shares that each of these divisions have in the basket (what we know as weighting) and only look at the year-on-year variations, the order changes slightly: Transportation leads by far, with 20.9%, followed by Recreation and culture (14.0%) and restaurants and hotels (11.0%). Food is slightly lower, in the middle of the table, with 6.0%. 

I mention this because the president of the Chilean Gastronomy Association (ACHIGA) attempted to explain the high price of dishes based on the increased costs faced by the industry. Lower capacity, implementation of health measures, increased food and transportation prices, among other factors, have impacted the business and, in his words, "That is ultimately passed on to the customer." I have no idea how much a paila marina cost in Angelmó a little over two years ago (my last visit there was more than that), but I get the feeling that the high price level—which is one thing—does not necessarily have much to do with recent cost increases. I don't think that before the pandemic, dishes cost, I don't know, 4,000 pesos, and that all the extra is due to costs. Inflation, which is a general increase in prices, is one thing, but it's another thing entirely that, facing the same cost increases, a paila in Angelmó costs twenty thousand pesos and another in a famous seafood restaurant in Providencia costs less than half that.

Let's look at the other side of the story. We often forget that in a free market economy—or something close to it—companies can't do anything without demand for their products, which comes from all of us, the consumers. Let's start with the idea that a dish in a restaurant is more expensive than the simple sum of its basic components (the food): the location, the service, the tradition, the prestige, etc., etc. Therefore, attempting to make an analysis based solely on how much a kilo of fish or clams costs is irrelevant. So is making one by commenting that the cookshops have dirt floors, plastic tablecloths, or a bench to sit on. All of the above is to substantiate the "robbery" nature of the bill. However, the very detail of the story told by the person who started the "funa" is very important. And I quote: "As we all know, February is vacation time, so Angelmó was packed, we couldn't find parking. In fact, we went into a cookery where there was a table available. We went in, ordered, and ate some typical dishes." Dirt floor, plastic tablecloth, benches to sit on, etc., but the whole place was packed. They were lucky to get a table. In other words, charging 18,000 pesos for a seafood platter, the tenants had all their tables full. I'm going to insist here, I'm not going to defend the prices or the fact that no receipts are given, but we consumers have a role to play if we think a price is excessive. That powerful role is to not buy, to leave, to not validate mistreatment or poor service.

So why does a paila marina cost 18,000 pesos? Because there is someone willing to pay 18,000 pesos for one. Or 5,000 pesos for a coffee. Or half a million pesos for a concert.

Nathan Pincheira 

Chief Economist at Fynsa