BBVA Mexico sees complications to control inflation, despite efforts by the AMLO government

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“We are in an environment where it will be very difficult to reduce inflation despite the government’s efforts because inflation is coming to us from abroad, it is not a phenomenon in Mexico, it is a global phenomenon, what we are seeing is a phenomenon of global inflation”, explained Carlos Serrano, Chief Economist of BBVA Mexico.

BBVA Mexico has recognized the efforts of the government to try to attack the problem of high inflation, after the presentation this Wednesday of the Package Against Inflation and Scarcity (PACIC). However, he considered that it will be very difficult to reduce it since it comes from outside.

“We are in an environment where it will be very difficult to reduce inflation despite the government’s efforts because inflation is coming to us from abroad, it is not a phenomenon in Mexico, it is a global phenomenon, what we are seeing is a phenomenon of global inflation”, explained Carlos Serrano, chief economist of BBVA Mexico.

Within the framework of the presentation of the Real Estate Situation report, the analyst explained that the inflationary problem is due to factors derived from the pandemic, such as bottlenecks in supply chains; as well as the recomposition that occurred in consumption patterns, and the conflict of the Russian invasion of Ukraine, which, among other things, has increased energy prices in a very notable way.

“We recognize the government’s efforts to try to attack the problem, we also recognize the enormous degree of difficulty they face. This is not something of Mexico, all the countries of the world are looking at how to contain inflation and it is not being achieved. It is very complicated because we are having some very powerful supply shocks”, she pointed out. 

Positive supply measures 

Carlos Serrano considered positive some measures announced in the package, such as those related to the offer. He even expressed that they should stay permanently.

Some of these are: increasing the supply of some goods, improving distribution logistics, and lowering or eliminating tariffs in some cases.

“These supply measures, hopefully they stay permanently, because that will help the economy to be more efficient. So we see them in a positive way, ”he stressed.

Another thing that he described as positive is that there are no measures on the demand side “and that fiscal restrictions are not being considered.”

Questions that a ceiling is put on the price of some basics

On the other hand, something that BBVA Mexico ‘s chief economist questioned is that some basic products be capped , especially since the economy is open.

“It is very difficult to think that the price of wheat rises throughout the world and here we can contain it, because what is going to happen if it is lower here is that it is going to be exported. It is very difficult, in an open economy like Mexico’s, to impose price controls,” he pointed out.

He considered that putting generalized subsidies also benefits people with higher incomes, so he better proposed that support be granted to people with lower incomes.

Source: eleconomista.com.mx

Mexico Daily Post