The business sector offered President Andrés Manuel López the willingness to sacrifice profits from his companies, reduce tariffs, substitute raw materials, and even simplify logistics or customs procedures, to cushion the increase in the cost of items in the basic basket; but they are adamantly opposed to price controls that distort the market and create a cartel.
The proposal of the business organizations is that they allow the free market, in such a way that the companies have a profit and contribute part of the profit so that the subsidy is granted to the population that really needs it”, informed José Medina Mora, president of the Employers’ Confederation of the Mexican Republic (Coparmex).
The business leader applauded the dialogue between the government of President Andrés Manuel López Obrador and the business sector to control inflation. However, “from Coparmex and the Private Initiative we manifest ourselves against price controls,” he established.
He warned that when a government sets a price for the basic food basket, it distorts the markets and the one who pays the consequences is the consumer. “This was seen with LP gas, exchange control in the market, at that maximum price, the population that does not require a subsidy receives a subsidy, and there is a limit below the price and they make the companies distribute, the more they sell, the more they lose, and then there may be shortages, and proceed to the black market and finally the population that should receive a subsidy, buys with cost overruns,” said the president of Coparmex.
Last Monday, the head of the federal Executive announced that he would shortly announce an anti-inflationary plan, which would allow the price control of some items of the basic basket, which would be agreed with the business sector, after inflation was reported it was reported with a rate of 7.7%, one of the highest levels since the Covid-19 pandemic and Russia’s war in Ukraine. Although this has been reflected in an increase of more than 10% in food.
José Abugaber, president of the Confederation of Industrial Chambers (Concamin), told El Economista that the option of controlling the costs of items in the basic basket is indisputable. “We have had several meetings with the Ministry of Economy and as Concamin, several proposals have been presented on how to help (combat costs) with tariff, logistics, Porte Letter and customs issues. And as an industry we are willing to contain, but it is a global issue. It’s not that easy,” he clarified.
The industry is working on import substitution, but it will take several months for this and other strategies to work.
Abugaber specified that different business organizations, such as Concamin, Concanaco, ANTAD, “we have had meetings (with the SE), and we are just waiting for what the president’s (AMLO) decision will be, based on the proposals that we have given it as an industrial sector. We hope that the work tables that the president says we are going to have to contain inflation are followed up and we are awaiting the call, ”he explained.
The president of Coparmex recognized “the grain of sand” of the federal government for the subsidy granted in energy, so that the price of gasoline does not rise and although it has an impact of 300,000 million pesos by 2022 in the SAT, it helps that other prices do not rise.