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Sign of the Times: Tortilla Prices Rise by 10-20%

By: David Real | Real Acapulco News - 15 December, 2010

(Chilpancingo, JG 15 December) Tortilla prices have recently risen from $10 pesos per kilo to $11 or $12 pesos in most parts of Guerrero, causing public consternation. The state Secretary of Economic Development, Jorge Peña Soberanis, said yesterday that such an increase is “unjustifiable” and threatened that the Mexican consumer protection agency (PROFECO) will impose sanctions on the “tortellerías” (retail outlets for tortillas) that follow suit. In Guerrero there are more than 3,000 such businesses.

Last year, the fixed price of communal taxis, called “colectivos” went from $10 to $12 pesos, causing a similar hue and cry. In spite of a government policy to suppress the price hike, the $12 peso price stuck, and the public had to accept it as a fait accompli. The same is likely to happen with tortillas. Both subjects are potentially troublesome for politicians, as the cost of tortillas and basic transport are critical to the well-being of Guerrero’s struggling poor. It is similar to the political fallout in the United States whenever gas prices rose to unattainable levels for those whose livelihoods depend on transport. Historically, the price of bread paid by the working poor has been identified with the downfall of governments, including pre-revolution France in 1789 and the Weimar republic in Germany in 1933. It is therefore no small wonder that the state government is pressuring small business owners to keep a lid on the traditional tortilla price of $10 pesos per kilo.

Retail prices in Mexico are not explicitly controlled, except in the case of legal monopolies like gasoline and electricity. But consumer protection laws permit regulators to attack price hikes for staple items if the increases are not “cost-justified.” In the case of tortillas, the government had installed a support program for the suppliers, providing credit for purchasing machinery and financing for buying corn at reduced prices. For this reason, the Secretary of Economic Development reacted so negatively to the increase.

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