MEXICO CITY — Mexican President Felipe Calderon on Wednesday announced a “price freeze” on more than 150 pantry staples as part of a pact with producers who have promised to cap prices through the end of the year.
It’s the second such deal he has reached with the private sector this year, underscoring the government’s fears about inflation, which last month hit an annualized rate of 4.95 percent, a 3 1/2-year high.
Under the agreement, food processors affiliated with some of Mexico’s largest industrial trade groups have agreed to hold the line on prices of basics, including canned tuna, refried beans, coffee, soup and juice.
Producers are essentially agreeing not to pass on their rising costs of production to consumers. That allows the government to achieve price controls without direct intervention in the economy, such as subsidies or sanctions against manufacturers.
“This reflects a commitment by Mexican entrepreneurs with the country,” Calderon said. “Fixed, stable prices . . . will be an enormous help to family budgets.”
In January, Calderon’s government negotiated a similar pact with major grocery chains to roll back prices on more than 300 items until the end of March. He reached another price-cap deal with tortilla producers last year.
Calderon has good reason to focus on pocketbook issues. Across Latin America, rising food and fuel prices have reignited inflation, a long-standing fear in this region. Less than a decade ago, Mexicans endured inflation approaching 20 percent annually, which was devastating to their paychecks and savings.
Mexico’s central bank raised interest rates last fall to combat inflation. Pressure is growing for another hike. Calderon is loath to let that happen, because that probably would slow the growth of Mexico’s economy, which so far is holding up reasonably well in the face of a U.S. slowdown.
To keep inflation in check and defuse rising social tension, he’s embracing a variety of free-market and populist measures.
