Reasons for inflation

The inflationary phenomenon that we are observing is the product of multiple factors, not how Western countries and not a few analysts, particularly from the US, have wanted to blame Russia’s invasion of Ukraine for this problem due to its impact on energy and food. It is said that Ukraine is a very high supplier of wheat, corn and barley so, being prevented from marketing them, there is little product on the global market and therefore its price. This statement is partially correct; this country produces 20% of these cereals, however, it is nothing compared to the effect of the western blockade on Russia, which produces 75% of the fertilizers that, without these, there is simply no agriculture. One more reason has been the lack of international foresight in the process of exiting the Covid pandemic, this has represented the 1st Great Crisis of Globalization in which developed nations took their manufactures outside their borders, mainly seeking to reduce labor costs; Asian countries notably benefited from this policy now, as these are the origin of the SARS-2-CoV virus, with ineffective vaccines and, at this point, continue to struggle with this pathogen, they have interrupted practically all supply and production chains ranging from medicines to high-tech electronic components. The foregoing, together with a series of tariff barriers from the West against the East, has generated the necessary scarcity to impact the price formation process. Finally we can add the existence of industrial quantities of euros, pounds and dollars that in the West have been dedicated to manufacturing since 2008 to get out of their financial crises first and after the confinement due to the pandemic, thus, checks were flown left and right from part of governments for aid against Covid and, central banks, printing money until they were tired to keep profits high in the markets. Deeply expansionary fiscal and monetary policies represent one more of the reasons that give rise to inflation rates not seen in four decades.

In the case of Mexico, there were no relief policies for society during the pandemic, we do not have much to do with the conflict in central Europe, but we are an essential part of the global chain of production and trade of goods and, more Importantly, there has been an alarming drop in the level of private investment, among other reasons, due to a lack of rule of law, along with crime that has advanced to such levels that cargo theft, land rights, extortion and the control of entire areas of the territory, including food markets and churches, have a considerable impact on the prices of such essential goods as avocados, eggs, chicken, even auto parts and automobiles.