The rise in the prices of food and beverages does not give truce to the wallets of Mexicans, even with efforts on various fronts to avoid a greater blow to the pockets of Mexicans, among them, the Package Against Inflation and Scarcity ( PACIC ) that since the presidency was promoted to try to contain inflation in 24 products of the basic basket.
In addition, the package of measures announced by President Andrés Manuel López Obrador at the beginning of May considers a zero tariff for imports of corn flour, wheat flour, white corn, sorghum, wheat, fertilizers and other strategic inputs, in order to give a break to the supply chain of food and beverage companies.
But consumers have the feeling that “everything is more expensive” every time they go to the supermarket or the market. “With what I used to buy chicken, eggs and vegetables to eat for three days, now it is enough for half. Money doesn’t pay and we have to work miracles to eat,” says Erika, a head of a family who does her food shopping at a market in the Guerrero neighborhood in Mexico City.
The perception of the head of the family is not wrong. During the first fortnight of June, headline inflation stood at 7.88%, a level higher than the 7.72% of the last fortnight of May. According to Jonathan Heath, deputy governor of the Bank of Mexico (Banxico), without PACIC, Mexico would have an inflation greater than 10%.
Until now, companies have kept food prices committed to the PACIC. For example, Alpura sells a liter of fresh milk for 23.50 pesos, while Bimbo’s large white bread hasn’t gone above 42 pesos either. The 140-gram Tuny tuna in water and oil costs 21 pesos and the 900-gram rice from the La Merced brand also remains at 29.32 pesos since the PACIC began on April 26.
But there are other versions of these products, in addition to other grains and fresh foods that have risen in the last two months. One of them is the egg, whose presentation of 12 pieces went from 32 to 37 pesos in the supermarket, while in stores and markets, the kilo -which has about 15 pieces- is around 48 pesos, and has reached 55 in This weather.
Bimbo and Coca-Cola FEMSA have also made adjustments to their price lists in the last two months. The bakery made a last increase this Monday 18 in its line of sweet pastries and in several versions of its box bread; while the bottler made a price increase at the beginning of June.
The prices of beans, lemons, saladet-type tomatoes, onions and canola oil continue to fluctuate. They vary depending on where and when the purchase is made. For example, a kilo of lemon is priced between 40 pesos and 52 pesos, depending on whether the purchase is made in a market, a collection office or a supermarket.
This volatility is no stranger to consumers. “I no longer know which products have a stable price. The only thing I know is that when I come to the market I don’t have the same things as last year,” says Erika, as she pays for the kilo of carrots and cucumbers she bought at the market.
Inflation has driven changes in consumption habits. Consumers have turned to bulk purchases in some product categories, such as grains, deli meats, cleaning products and even pet food, as brands launch smaller presentations of their products.
Aurrera, for example, recently added a presentation of half a liter of oil from its private label, to give buyers a more affordable option. According to the Inegi, the price of edible vegetable oils and fats increased 11.78% between December 2021 and June 2022.
Why is the effect of the pact not felt?
Humberto Calzada, Chief Economist at Rankia Latin America, explains that this perception among consumers that “everything is more expensive” two months after the PACIC is due to the fact that the measure only covers a limited list of products that, in many cases, , represent a small percentage of a household’s consumption.
The government measure will be valid for six months and the specialist foresees that the stabilization of the price of fuel and the cost of freight will be key to stabilizing prices. In the particular case of grains, mainly wheat -which directly impacts companies like Bimbo- the resolution of the conflict between Russia and Ukraine will be key.
“We could begin to see a turning point in the advance of prices when the supply chains normalize, which is the main factor behind the increases,” says Calzada. “Towards the end of the year we could perhaps see a normalization (in prices), but that depends on external factors that generate uncertainty in the world, such as logistics prices, the war between Russia and Ukraine and the new strains of COVID-19. “, Add.
