Ricardo Pascoe Pierce
Inflation is an indirect tax imposed on everyone who pays to buy, sell and consume. It is, in fact, an indirect and invisible tax since it is set by the market, not as a result of a governmental decree. In recent days INEGI reported that inflation in Mexico reached 8.8% in 2022. While this figure is an average across products, inflation is uneven in its impact on consumer products.
The cost of food products has grown much more, as anyone who shops at food distribution centers in the country knows. To go no further, the price of onions has shot up 87%. This is an extreme and alarming figure, but it illustrates the seriousness of the inflationary curve with no containment.
On several morning press conferences, President López Obrador proudly said that inflation was lower in Mexico than in the United States. That is no longer true. And when he met with President Biden in Washington, he offered him Mexican gasoline, “cheaper than U.S. gasoline,” he would have said. As it turns out, that is not true either. Today, gasoline is more expensive in Mexico than in the United States, despite the millionaire subsidy applied by the federal government to energy.
Additionally, according to ECLAC calculations, Mexico is the Latin American country that will experience the lowest growth (1.9%), after Haiti, which will have negative growth of -0.2%. The average increase in Latin America and the Caribbean will be, according to ECLAC, 2.7%.
Mexico’s Gross Domestic Product remains below the levels of the last pre-pandemic year. It is estimated that we will not reach the pre-pandemic GDP level until 2025. Banamex predicted this in 2020, and today the data confirms their forecast.
What is our national scenario, then? A recessionary situation is expected in 2023, a product of international factors (weakening of major economies, notably the United States and China, the war in Ukraine, and the dislocation of supply lines on a global scale). Growth will probably be below the 1.9% forecast for this year.
In Mexico, the labor market will shrink, pushing a significant sector of workers into the informal sector, a process already exacerbated by the handling of the economic crisis caused by the Covid-19 pandemic. The informal sector could reach 60% of Mexico’s labor force when at the beginning of the six-year term, it stood at 50%.
Despite the increases in the minimum wage in recent years, the absolute minimum wage will fall by almost 1% this year due to the inflationary impact on the population’s standard of living.
This is why people ask, “How much will it cost me to buy a tortilla? When López Obrador took office, tortillas ranged from $9 to 12 pesos per kilo. Today the kilo fluctuates between $20 and $27. The price has increased between 80% and more than 100% in this historical period. In other words, tortillas have risen much more than the rate of inflation and common food products in the Mexican diet.
Tortillas are the basis of the diet of most Mexicans. The rise in its price due to inflation indicates that our country’s most affected by the crisis are lower-income families.
In terms of economic management, the current government is performing worse than previous administrations. At the end of this six-year term, Mexico will have more poor people, more unemployment, and more hunger.
[email protected]
@rpascoepgmail-com
Further Reading: