Mexico to boost output of staple foods in plan to curb inflation

div classBodysc17zpet90 cdBBJodivpMEXICO CITY Reuters – Mexico will increase production of staple foods such as corn, rice and beans as part of a plan agreed with business leaders to control consumer price inflation which is at a twodecade high, Finance Minister Rogelio Ramirez de la O said on Wednesday.p

pRamirez was speaking at a news conference alongside President Andres Manuel Lopez Obrador, who said the plan aimed to ensure fair prices for a basket of staple foods. Mexico was not planning to apply price controls, Lopez Obrador said.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pThe plan would be in place for six months and could be renewed if necessary and agreed on with business leaders, said Ramirez, adding he expected a nearterm impact on inflation expectations for basic goods.p

pMexican annual inflation reached 7.72 in the first half of April, an over 20year high which could prompt more interest rate increases by the central bank.p

pGoldman Sachs economist Alberto Ramos called increasing the supply of food and grains, reducing import tariffs and staying away from coercive measures and outright price controls “positive developments.”p

pBut Ramos underscored that it was unclear how food supply would increase significantly in the shortterm, and said any additional local food and grains supply was likely to still be more expensive due to rising fertilizer and production costs.p

p“The international and LatAm experience with price controls and ‘voluntary price agreements’ is not positive since they tend to be very ineffective beyond the very shortterm to keep inflation under control, create distortions in relative prices, and repressed prices usually lead to larger increases later on,” said Ramos.p

pStill, some of Mexico‘s most important businesses backed Lopez Obrador’s antiinflation plan.p

pBillionaire Carlos Slim, Mexicos richest man, had told the government his Mexican telephone businesses Telmex and Telcel, units of America Movil would not raise prices for the rest of 2022, according to Ramirez.p

pLopez Obrador said Mexican supermarket chains such as Chedraui and Soriana supported the antiinflation plan.p

pBreadmaker Grupo Bimbo also backed the initiative, and is set to maintain its white bread prices for six months, company executive Liliana Mejia told the news conference.p

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pp Reporting by Valentine Hilaire and Ana Isabel Martinez Writing by Anthony Esposito Editing by Dave Grahamp

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