Worst inflation in 23 years

We have problems. Or several. Mexicans are suffering from the worst inflation in 23 years. While inflation is wreaking havoc in a large part of the world’s economies, in some, many, it is starting to decline. But on the other hand, in our country it has not yet reached its maximum.

In our northern neighbor and largest trading partner, inflation has been declining for two months now. Here, instead of following this trend, the opposite is happening, further hurting the “downtrodden” segments of the population as a whole.

We all feel inflation; in the prices of medicines, medical consultations, fuel, and how much food has risen in price. The government may blame exogenous factors such as rising prices for staple grains (corn, wheat, rice, beans) or entrepreneurs who have raised prices for items such as bread or soft drinks. However, one of the reasons that most contributes to inflation is forgotten – and Ronald Reagan summed it up masterfully: “Inflation is the price of government spending that you thought was free.”

The government has the ability (some would say obligation) to invest the money it raises (or received in the form of credit/debt) in strategies and actions that actually help bring down inflation, create job opportunities and growth. There is always an undesirable alternative: to spend them on jobs that do not turn into really productive sources.

He can invest, as the United States does, in measures to curb inflation and develop the supply chain (an investment of more than 450 billion dollars; fortunately, something will affect us thanks to the way the Americans seek to develop said supply chain) or, well, make a “pact ” at the National Palace – resulting in a “lowered” photo without large offers, like in Mexico – (yes, during a meeting with important businessmen of the country, instead of setting up a serious anti-inflation plan with them, viable and holistic, they were offered to buy figures for the drawing of the National Lottery on September 15).

The United States also passed the Anti-Inflation Act, which is not a “dead letter” or “smoke screen” as it is here. It’s a $400 billion plan to control rising prices and fight climate change (which go hand in hand with hydrocarbons). In Mexico, money is being buried in Dos Bocas, betting on the past and pollution, while the gasoline subsidy continues (it exceeds 395 billion pesos this year).

At this point, we are well aware that inflation continues to gallop despite the aforementioned subsidy, and that we bear the cost of said “support”. One that served to boast that gas is cheaper than in the US and to subsidize Americans from the border who cross the border to load in our country. In other words, the additional income received by the Treasury (about 400 billion pesos) from the increase in world oil prices has disappeared.

It should be noted that the Economic Package for next year again does not provide support for companies (as in the US) and does not provide for a strategy to reverse high inflation. Waste in pharaonic works and in social programs full of opacity and corruption only accelerates inflation (when the latter should fight it).

The response of the Mexican government was slow (almost non-existent) to counter high inflation. This is not blaming entrepreneurs, the external situation or the provision of “other data” that may be encountered. There are ways to counteract this without incurring great costs for captive taxpayers.

Unfortunately, given the idleness and what is visualized in the 2023 budget, one can only think that inflation will continue, putting the country at risk of having stagflation next year, that is, stagnation with inflation.

VERONICA MALO GUSMAN
[email protected]
@MALOGUZMANVERO