Sofía Ramírez, general director of Mexico, how are we doing?, considered for her part that the reference rate could rise to 9.5%.
Vicente Yáñez, executive president of the National Association of Self-Service and Department Stores (ANTAD), argued that “what you have to do is let Banco de México do its job. We have to trust that they are going to do the right thing and not put pressure on them.”
“Inflation expectations are well anchored (regardless of) how we measure them, by wages or by the difference paid by inflation-indexed bonds and nominal-rate bonds, both in the medium and long terms,” Alexis Milo said, adding that wage growth is below inflation, in part because the recovery of formal employment has been slower than expected.
Behind the increase of 75 basis points made by the Federal Reserve (Fed) , Banxico’s Governing Board is expected to announce an increase of the same magnitude this Thursday afternoon. “If they increased by 50 (basis points) the exchange rate would depreciate and there we do run the risk that inflation expectations would begin to be unanchored,” warned Milo Caraza.
PACIC
Regarding the actions of the federal government in fiscal policy to deal with inflation, the participants of the Expansión Meeting agreed that the package against inflation and famine (PACIC) has indeed helped to contain the rise in prices.
It is important to note that the increase in the price of products and services is due to external factors such as the disruption in supply chains caused by the coronavirus and the war between Russia and Ukraine, which triggered the price of energy and some grains.
“Inflation is the most expensive tax, the most predatory and it is the tax that hits what we want,” said Yáñez Solloa.
Faced with the proposal to implement a mechanism against inflation, the private initiative spoke out for not imposing a price control due to the negative effects such as shortages, unemployment, black market and discourage investment; “price control is the demon that nobody wants to have,” said the director of ANTAD.
The government did not seek to fix prices. “We know that there are going to be fluctuations, as there are; there are products that have gone up in price and others that have gone down”, reiterated Jesús Cantú while pointing out that “price control was never thought of”.
The federal government sought to influence the supply side, as evidenced by the zero tariff on imports of more than 20 food products and supplies, said Jesús Cantú, head of the Unit for Regulations, Competitiveness and Competition of the Ministry of Economy ( I KNOW).
In the medium term, added the federal official, the Ministry of Agriculture will seek to increase the production of basic products.
“Both the tariffs and the elimination of compensatory quotas for ammonium sulfate (to produce fertilizers) are for the production chain, to impact previous costs,” he specified.
The ANTAD director added that, from the private sector, through agreements with suppliers, they sought to form a basket of products that “increased as little as possible, always with market mechanisms.”
Vicente Yáñez and Alexis Milo agreed that there is a relationship between the opening of self-service stores and the decrease in prices. The foregoing without bankruptcy risk for small businesses already established.
gasoline
The price of gasoline is a sensitive issue and has a direct impact on public opinion. On the subject, the economic consultant pointed out that the IEPS subsidies on gasoline and diesel have to be better focused.
In that sense, “the issue of subsidizing diesel, because 90% of the load is there, would make much more sense for a supply issue,” said the director general of Mexico, how are we doing?
“The richest decile is taking 32% of the gasoline subsidy,” said the economics expert. On the other hand, “the other part of the subsidy is reaching a segment of the population that has an impact on public opinion,” added Jesús Cantú.
SMEs and national content
One of the challenges for Mexico is to increase the national content in the final products that are made in Mexico, as well as to include SMEs in the supply chains.
Cantú lamented that, although Mexico is the main exporter of flat screens, the national content is only 10%.