Given the rise in gasoline prices worldwide, the Mexican government has stopped charging the IEPS tax on each liter of gasoline and diesel sold in the country.
IEPS in the red
“Although the higher level anticipated for the price of oil will have a favorable effect on public revenue in 2022, the collection by IEPS for gasoline and diesel could be negative if the policy of subsidizing gasoline consumption is maintained to avoid another ‘gasolinazo ‘ and a greater inflationary impact”, referred to the analysis.
A BBVA estimate details that a 33.3% increase in the international price of conventional gasoline -seen between December 27, 2021 and March 14, 2022- will have an immediate impact on the collection of this IEPS of -72.8% to quarterly rate, which propitiates an additional quarterly reduction of 81.7% for the quarter after the shock to the international price of gasoline.
More and more inflation
Another effect that is already being felt from the conflict in Ukraine is the increase in consumer prices due to the higher prices of energy products (perhaps excepting gasoline) and indirectly due to the increases in international prices of grains and metals, specified the analysis carried out. by Javier Amador and Arnulfo Rodríguez.
This will affect non-core and core inflation through higher food and non-food merchandise prices.
Finally, higher inflation in the short term and the increase in upward risks regarding its future trend will be reflected in higher interest rates than previously forecast.
Higher interest rates
The analysis anticipates that Banxico will raise the reference rate again by 50 basis points to 6.50% this week and that it will take it to levels of 8.0% at the end of the year.
“Higher inflation that will impact household disposable income (if not offset by increases in real wages) and a more restrictive monetary stance to limit inflationary risks will limit economic growth”, highlighted BBVA Research.