López Obrador acknowledges that low inflation is not yet reflected in food

Alonso Urrutia and Emir Olivares

Newspaper La Jornada
Tuesday, October 25, 2022, p. 3

Inflation in Mexico has been contained and a slight reduction has begun that is not yet reflected in the price of groceries, acknowledged President Andrés Manuel López Obrador, who hoped that it will decrease after the agreement with producers.

He cited, for example, the pact that his government signed with Walmart: By giving them a free food import license, without tariffs, without bureaucratic procedures, they become responsible for the quality of imported products.

He celebrated the reduction from 8.7 to 8.5 in annualized inflation in the comparison between September and October, although he considered that the effect will begin to be felt gradually, due to the times of the opening of the market.

He stressed that the large chains (Walmart, Soriana and Chedraui) already offer the basic basket at the agreed price, one thousand 39 pesos, which is essential because Walmart concentrates 25 percent of the retail market and, together, the three corporations control almost 50 percent of retail sales.

At yesterday’s conference, López Obrador dismissed the criticism of some economic sectors about the opening of the food market: “It is the application of the free market, I don’t know why they bother, if they raised that flag, only that it was misleading. It was the free market in the compadre’s oxen. ‘Let there be competition, as long as I remain a monopoly.’ It already seems that I am becoming neoliberal, they are already convincing me”.

– Have you converted, President? –She asked him.

-It is that not everything of the neoliberal policy is bad if it is applied properly. It is usually designed to favor a minority, which is bad. The free market is distorted, it is not applied, it is used only as a parapet. Didn’t they even create autonomous organizations to avoid monopolies, what they called preponderant agents? And what happened? Monopolies continued.

Fortunes, for corruption

The question gave him a guideline to mark distances in front of the traditional left, which, he said, has many dogmas. He mentioned his discrepancies with the vision that attributes the fortunes in Mexico to the exploitation of the proletariatthen, in his opinion, the peculiarity in the country is that they arose under cover of corruption and privatizations that generated businesses protected by public power.

He expressed his differences on the increase in taxes as a route to increase government financing. He reiterated that his administration does not seek any fiscal reform and he believed that, before tax increases, it is necessary that there be no forgiveness and that the government tighten its belt so as not to incur excesses.

López Obrador alluded to the recent criticism of his government by former presidents Ernesto Zedillo and Felipe Calderón: The truth is, it is not for anger, it is a stamp of pride that these corrupt people question what we are doing. They have the right to do it because we are free, but it is a cartoon.

He recalled that before the conversion of private debts into public debts in the banking sector, through the mechanism known as Fobaproa, Zedillo projected a total cost of 125 billion pesos. When Congress approved it, it was already a billion pesos and currently Mexico has already paid a billion pesos in interest and the original billion is still owed.

Comparison with EU and Europe

The President compared the evolution of inflation in Mexico with that of the United States and Europe: in Mexico it was 8.5 percent in October compared to 8.2 percent in the United States and 9.9 in Europe.

He stressed that the impact of the energy sector on inflation in Mexico is marginal due to the fuel subsidy, which reduces the incidence to 0.4 percent, compared to 1.4 percent in the United States and 4.2 in Europe.

He recognized that the greatest effort that Mexico must make is in the increase in groceries, since this item still registered a slight increase compared to September, to settle at 4.3 percent.

In contrast, in the United States and Europe this line has a lower weight, 1.6 and 2.2, respectively.