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News Article

Presidency Introduces Anti-Inflationary Plan

By Sofía Hanna | Thu, 05/05/2022 - 16:16

Today, President Andrés Manuel López Obrador introduced a plan to fight Mexico’s skyrocketing inflation, which is affecting the cost of basic food products such as milk, rice and bread. López Obrador claims that the plan will not control prices but sell those products at a “fair price.” Critics, which include small producers and vendors, warn that these actions are insufficient to generate a real impact on inflation and will end up as price controls.

 

“We must act, not stand idly by because inflation, as we all know, greatly affects the economy and affects people with limited economic resources more. It is a tax and we must avoid a high cost of living; that is the most precise term. We all want inflation to be controlled,” said López Obrador during the presentations of the anti-inflationary plan.

 

Its main characteristics include an increase in grain production and support for fertilizer distribution and the Sowing Life and Production for Wellbeing programs. The plan will also build a strategic corn reserve using resources from the Mexican Food Security (SEGALMEX) organization and guarantee stable prices for corn, beans, rice and milk to strengthen production. Other characteristics include the reinforcement of security on highways to prevent theft of food and supplies and a reduction of tariffs at customs and ports. During six months, customs will apply zero tariffs on the import of basic goods and supplies. Finally, major telecommunication providers Telmex and Telcel will not raise the prices of telephone and internet services for the remainder of the year, according to an official press release

 

The plan’s measures to offer essential foodstuffs at stable prices is being sharply criticized as a “price control.” But Minister of the Economy, Tatiana Clouthier, clarified that “this plan does not intend to lower the prices of the products of the basic basket that were included, nor to fix them, but it does seek to stabilize them for the benefit of the most disadvantaged families.”

 

However, financial experts warned that this measure will not reduce inflation. “This package is highly creative, but they are promises that also put pressure on public finances,” said Manuel Sánchez, former Deputy Governor, Banxico. Also, Federico Rubli, Vice President, IMEF’s Economic Studies Committee, told el Heraldo that “to contain inflation, the governing board should not be afraid that they might go overboard. The only efficient anti-inflationary plan is the tightening of monetary policy.”

The data used in this article was sourced from:  
Ministry of Economy, El Heraldo, GOBMEX,
Photo by:   olieman.eth, Unsplash
Sofía Hanna Sofía Hanna Journalist and Industry Analyst