Mexico to Halt Some Food Exports in Bid to Curb Soaring Inflation




  • In Business
  • 2022-10-03 17:09:46Z
  • By Bloomberg

(Bloomberg) -- Mexico aims to cut the cost of 24 basic goods by curbing food exports and extending a pact with major companies in the latest attempt to tame soaring consumer prices.

The government wants to cut prices for the key goods by 8% from their average peak, through February 2023, Finance Minister Rogelio Ramirez de la O said Monday.

The government will pause exports of goods including white corn, beans and sardines, as well as scrap metal used for food cans, Ramirez said. It will also suspend requirements such as tariffs and other import barriers for firms that agreed to the deal, he said.

The companies involved in the pact include supermarkets Wal-Mart de Mexico SAB, Grupo Comercial Chedraui SA and Organizacion Soriana SAB, as well as food producers such as Gruma SAB de CV, Industrias Bachoco SA and Sigma Alimentos SA, Ramirez said.

"Unlike the US where inflation is caused by demand, in Mexico it's due to supply," Ramirez told reporters. "For that reason, the best response is to produce more food and cut regulatory and logistical costs."

The consumer protection agency will have the power to sanction any price abuses, Ramirez said. A type of corn flour used to make tortillas should drop 3% under the plan, he said.

Measures like reducing paperwork and pausing tariffs should help companies become more efficient and reduce costs, but the pact "is unlikely to lead to a marked improvement regarding food inflation," Bradesco strategist Rodolfo Ramos wrote in a note, adding that minimum wage increases and higher social spending could add pressure on inflation.

Latin America's second-largest economy saw inflation soar to a 22-year high of 8.7% in August, even as some regional peers including Brazil have begun to see price increases slow. Argentina has sometimes tried to curb inflation by restricting exports of beef and other products, with limited success.

Read more: Export Ban on Popular Argentine Beef Cuts Extended for Two Years

President Andres Manuel Lopez Obrador has argued that the agreements can't be considered price controls because companies will decide the prices themselves. He said Monday that soaring inflation may temper the size of minimum wage hikes going forward.

At the same time, the central bank raised its benchmark interest rate to a record 9.25% last week, citing a worsening inflation outlook.

(Updates with president's comment on minimum wage in ninth paragraph.)

Most Read from Bloomberg Businessweek

  • Millions in Cryptocurrency Vanished as Agents Watched Helplessly

  • The Unstoppable Dollar Is Wreaking Havoc Everywhere But America

  • As Home Prices Surge, Americans Are Moving to Cheaper Places

  • Jay Powell Needs Investors to Lose Money

©2022 Bloomberg L.P.

COMMENTS

More Related News

Amazon CEO Jassy Says US Shoppers Are Still Bargain-Hunting
Amazon CEO Jassy Says US Shoppers Are Still Bargain-Hunting

(Bloomberg) -- Amazon.com Inc. Chief Executive Officer Andy Jassy said buying behavior was still muted as shoppers looked for deals during the Thanksgiving...

RBC
RBC's Canadian Business Drives Earnings Ahead of HSBC Deal

(Bloomberg) -- Royal Bank of Canada posted earnings highlighting its strength at home a day after striking the company's largest deal ever to bolster the...

Turkey
Turkey's Most Valuable Stock 'Too High' After GameStop-Like Surge

(Bloomberg) -- Most Read from BloombergScientists Revive 48,500-Year-Old 'Zombie Virus' Buried in IceThese Are the Best and Worst Cities for Expats to Live...

Binance Re-Enters Japan With Sakura Exchange Purchase
Binance Re-Enters Japan With Sakura Exchange Purchase

(Bloomberg) -- Binance, the world's biggest cryptocurrency exchange, bought a Japan crypto exchange service provider to re-enter a market it said will play a...

GoTo Shares Fall to Record Low as Major Holders
GoTo Shares Fall to Record Low as Major Holders' Lock-Up Expires

(Bloomberg) -- Shares of GoTo Group plunged to a record low as a lock-up on its major shareholders' stakes neared expiry, suggesting investors are expecting ...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business