They call it 'inflación' south of the border
I was speaking with a Mexican friend on the phone and complained about our gasoline and food prices. He laughed and told me to look south of the border for more inflation. I did look, and my friend is right, as I see in this post at Pulse News Mexico:
According to the National Institute of Statistics and Geography (Inegi), inflation in Mexico hit 7.45 percent in March, its highest level in 21 years.
The annual inflation rate for the third month of the year was higher than the 7.28 percent reported in February, and exceeded the 7.38 percent forecast by the Bank of Mexico (Banxico).
The Inegi said that the inflation was blamed mainly on higher fuel costs, as well as increases in the price of air transportation, eggs and corn tortillas.
It sounds familiar, does it not? Fuel costs? Transportation? Eggs?
What makes inflation in Mexico scary is that it usually affects the peso. I remember massive devaluations in 1982 when inflation in the U.S. went south and tore apart the economy. We started that year around 26 pesos to 1 dollar, then it jumped to 85 by summer and then 176 by Christmas. It was 3,000 to 1 dollar in 1994, and then they changed the currency by eliminating the three zeroes. So 3,000 to 1 became 3 to 1.
The exchange rate today is 20.1851 per 1 U.S. dollar and floating in the wrong direction.
Peso devaluations are a big deal in Mexico. The locals take it out on the current president, as they did in 1976, 1982, and 1994. Will they take it out on President López-Obrador? They probably will! Also, devaluations drive a lot of people north looking for economic stability.
Inflation in Mexico has a lot of unintended consequences. Did you say Title 42?
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