PACIC Program Fails to Control Basic Goods Prices

The current administration’s strategy to control prices of basic goods through the Inflation and Deficiency Package (PACIC) has fallen short of its goals, according to EL CEO. The initiative, aimed at stabilizing or reducing prices for 24 vital items, saw a 4.83% annual increase in the first half of May.

This figure represents the highest level in the past three months and continues the trend of rising prices for three consecutive biweekly periods. Within the PACIC, the annual inflation of 4.83%  was primarily driven by price hikes in 18 of the 24 monitored basic goods. The most significant increases were seen in tomatoes (55.41%), onions (44.52%), and other fresh peppers (39.07%).

Banorte analysts observed a sustained acceleration in the agricultural sector, particularly in fruits and vegetables, nearing the 20% mark for the first time since the year began, mainly due to significant spikes in tomato prices. They emphasized that relying on increased imports may not adequately offset the impacts of drought on all goods. CONAGUA's latest report indicates that 86% of the country is currently experiencing abnormal dryness or worse, with exceptional drought levels reaching their highest since 2011.

The biweekly inflation rate for PACIC, using consumer price index weights from the Instituto Nacional de Estadísticas y Geografía (INEGI), stood at 0.35% in the first half of May, marking three consecutive biweekly increases. Among the 11 products that saw price hikes during this period, tomatoes once again led with a biweekly rise of 10.44%, followed by oranges at 4.47%.

The first round of stimulus deliveries under this package began in May 2022, comprising three different versions. Since the initial announcement, cumulative inflation has reached 14.73%, with 19 biweekly periods surpassing a 10% inflation rate.