Tortilla Price Spike Has Mexico’s Finance Minister Pointing Fingers

(Bloomberg) -- Mexico’s finance minister said he’s complaining to companies with large market share that are boosting prices of their goods, a sign the government is getting impatient with businesses as inflation spikes to the highest in over two decades.

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Finance Minister Rogelio Ramirez de la O singled out companies key to tortilla production, questioning in a radio interview why the staple food in Mexico is becoming more expensive even as corn prices are falling.

“We want to understand that, and once we understand that, we want to reach agreements with those companies,” Ramirez de la O told Radio Formula on Monday.

President Andres Manuel Lopez Obrador reached a deal with producers and retailers earlier this year to limit price hikes on a basket of 24 key consumer products and has recently sought to expand those efforts. But annual inflation has kept accelerating, hitting 8.7% last month, the highest since 2000.

Read More: Mexico Inflation Hits Highest Since 2000 Despite US Slowdown

Last week, Lopez Obrador called out several companies for alleged price-gouging, singling out corn flour brand Maseca and its rival Minsa for “abusing with exceptional profit in times of crisis.” He said the Finance Ministry would ask for an explanation from the two businesses, as well as supermarkets Wal-Mart de Mexico SAB, Grupo Comercial Chedraui SA and Organizacion Soriana SAB.

Unlike Lopez Obrador, the finance minister didn’t mention any company by name.

“We’re worried, not only because of the basket of 24 items, but because of generic items that aren’t in the basket,” the finance chief told Radio Formula. “There’s a complaint about inflation and we’re taking that complaint to the companies where we see a great concentration of businesses that have a very high participation of the market.”

Mexico’s central bank predicted that inflation would peak in the third quarter of this year, but that hasn’t entirely alleviated consumers’ worries. The Finance Ministry estimated in its 2023 budget proposal that inflation would be 3.2% next year, but economists are more pessimistic.

“We are going to start with the biggest driver of inflation, the tortilla, potato, and onion, because the rest of inflation is based on those,” Ramirez said. “It’s not that everything is increasing at the same pace. There are drivers and prices, like that of gasoline, which have all kinds of secondary effects.”

Read More: Tortillas Help Drive Mexico’s Inflation to New 21-Year High

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