Almost no impact from PACIC; Families try to mitigate inflation

Almost two months have passed since then Enrique Suárez, father and head of the family in CDMX and devoted to the house, he decided to stop cooking. Gradually he has seen the rise of oil, sugar, tortillas, beef and tuna.

Mexico is facing inflation not seen in a little over two decades. In the first half of May, annual headline inflation was 7.58%, according to Inegi, far from the Bank of Mexico’s (Banxico) target of 3%.

Enrique and his family, consisting of three minors and his wife, decided it would be better to buy their groceries at a community kitchen, a federal program that sells complete meals where 85% of the cost is covered by the federal government and there is one Recovery fee paid by the user, which Enrique takes charge of 11 pesos per meal.

“I prefer to buy groceries from the community dining room because I can have groceries like the ones I had for a lower price,” says Enrique, 30. The menu includes noodle or lentil soup, rice, some stews like pork in green sauce or chicken for main course and beans.

During the day, Enrique spends between 55 and 66 pesos to buy a meal for each family member and set aside another for his wife, the clerk at a mall, to take to work the next day. Now he only cooks on weekends when he doesn’t open the dining room.

This however it has not improved their family finances. “Even though I’ve thought about saving, I come out undecided, eat a little better, but it’s still not enough,” he says. Although he has tried to save on some things like gas, he uses electricity by using the microwave or electric grill. His bimonthly receipt went from 90 to 150 pesos.

On May 4, the President, Andrés Manuel López Obrador, announced the implementation of the Anti-Inflation and Tightening Package (PACIC), a strategy that will last six months and includes a series of measures aimed at containing the rise in inflation in to contain Mexico , but that its impact will be almost nil, according to analysts consulted by The list.

the specialists Gabriela SillerDirector of Economic and Financial Analysis at Banco Base, and Ana GutierrezCoordinator of labor market and foreign trade at the Mexican Institute for Competitiveness (IMCO), agree that aspects such as zero import tariffs on 21 products in the basic basket will not have a significant impact on the rise in inflation and that external factors will play a stronger correlation with the course of inflation.

“An effect can be assessed quickly, the potential is limited and will be minimal,” says the coordinator for labor market and foreign trade at IMCO.

Siller also notes that the element that may have the greatest impact on PACIC is the stabilization of gasoline and diesel prices. “The rest, in my opinion, will have no effect, It will be practically zero.” he claimed.

IMCO points out that the 21 duty-free products account for just 12% of Mexican consumer spending. In addition, Mexico has free trade agreements with 50 countries, which result in preferential treatment in tariffs, according to the PACIK It only affects imports from countries that do not have free trade agreements, such as Brazil, Argentina and China.

For example, PACIC imports of potatoes and onions were subject to a zero duty because the sole importer was the United States.

Food inflation was 13.2% in the first half of May. Of the products included in the PACIC, only a few have decreased compared to last year, some of which are:

  • carrot, -0.6%
  • Rice, -0.6% and
  • bean, -6.5%

While those who have had the biggest increase are:

  • box bread, 16%,
  • beef, 16.1%,
  • vegetable oil, 36%,
  • onion, 72.6% and
  • the tortilla, 16.6%.

“This situation is alarming because in Mexico 40.3% of the population live in a situation of working poverty,” says Mexico, how are we? in an analysis.

According to the study center, the success of the program depends on containing the development of the price level of these items in the coming months.

Beef is off the diet

Enrique, as head of the family, noticed the increase in the price of oil before buying it for 22 pesos, then it went up to 24 until it reached 45 pesos. “I had to exchange it for another oil that I didn’t consume but that my mother used and it costs between 42 and 43 pesos, a little cheaper,” he says.

Beef was eliminated from his diet two months ago. “I no longer eat (beef) meat and not because I don’t like it, but because of the price,” he says.

“Not only am I the one who consumes less meat, but also the dining room, because when they give meat, it’s pork because it’s cheaper than beef, and the portion is minimal, it’s even rude that you’d rather eat more buy to increase the share,” he emphasizes.

The same strategy was implemented for tortillas and tin bread. The tortilla used to cost between 14 and 15 pesos, but just over a month ago they were already selling a kilo between 19 and 20 pesos, he points out, so he prefers not to eat or take the 10 or 12 tortillas in the dining room out , when he reaches.

As for the tin bread, also considered in the PACIC, where the Bimbo company would not raise the price of large white bread, Enrique preferred to have it made by a baker than to buy it in the supermarket.

“The only benefit I see in branded bread is the sell by date, but it costs more than 40 pesos and when I bought it it was just for the kids’ sandwiches; Now that I’ve made it costs 22 pesos, but I can’t buy many because it spoils because they don’t have any preservatives.”

What can families do in the face of inflation?

The strategies Enrique used are very similar to those recommended by experts to counter the effects of inflation.

Both analysts agree on thatThe families can substitute products Your daily consumption against cheaper ones and even see what feeds you better without being more expensive.

“These are solutions that nobody likes because we want to choose products that we like or that taste better, but in this situation there is no other way,” says Siller.

Another important action is to carry out a spending planning and adjust to meet the initial need.

They warn that there are still international issues that could pose a risk for Mexico, such as the conflict between Russia and Ukraine and a possible recession in the United States.

Banxico forecasts that inflation will remain at 7%, falling to around 6.4% towards the end of the year. In addition, it considers attainment the target of 3 to 1% of inflation by the end of 2023 or early 2024.

Enrique hopes to be able to cook his own food again so his family can eat well and save some money. “I feel lucky because my kids are healthy and not sick, but I feel like I don’t have enough money”.