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Bizarre that in 2007 something like this happens, the Romans had the exact same problem with bread and their poor. But I will let you in on a little secret; this is just a symptom of Globalization and the liquidity problem. Ah, you want to know why! Well, let me tell you, follow the money…
-Sapiens
Tortilla Pact
President Felipe Calderon, seeking to shore up support for his administration less than two months after taking office, arranged a price freeze with tortilla makers on Jan. 18. The rise in corn may lead to price increases at tortillerias, as small tortilla shops are known, once the government accord ends next month. Higher corn prices are also driving up the cost of livestock feed, eggs, chicken and beef.
``Risks for the peso will begin at the end of April or beginning of May when the pact ends, inflation pressures begin to mount and demand for bonds drops,'' said Luis Raul Rodriguez, head economist at Vector Casa de Bolsa SA, a brokerage in Mexico City. ``It'll be a dangerous moment.''
Under the agreement, tortilla shops agreed to hold prices at a maximum of 8.5 pesos ($0.76) a kilogram, down about 2.5 pesos from the highest prices at the time.
Calderon also dispatched 380 consumer protection agency officials to crack down on cheating and record prices at shops throughout the country. The agency began publishing those prices on its Web site to try to foster competition. They report on about 180 shops in Mexico City alone.
Enchiladas, Quesadillas
``We need citizens to call and complain and report tortilla shops that are exploiting the situation,'' Gladis Lopez, head of the agency's enforcement department, said in an interview in Mexico City. ``We're getting there.''
Historians track the tortilla back about 1,000 years, when the Mayans controlled much of present-day southern Mexico from their base in the Yucatan peninsula. A flat bread made out of ground corn, quicklime and water, the tortilla is served at breakfast, lunch and dinner in many Mexican households. It's featured in some of the country's most famous dishes including tacos, enchiladas, quesadillas and flautas.
The tortilla accounts for almost half of the calories the average Mexican consumes each day. Lula Martin del Campo, head chef at HSBC Holdings Plc in Mexico City, said there's no food that has similar importance in the U.S. diet.
``The majority of poor Mexicans use tortillas as their forks and knives,'' Martin del Campo said.
Core Inflation
Calderon's measures pushed down tortilla prices 1.3 percent in the first half of February after they rose 8.8 percent in the previous two months.
The drop slowed a surge in the core inflation rate, the price gauge most closely watched by analysts in Latin America's second-biggest economy. The annual core rate, which excludes energy and some fresh foods, was 3.95 percent in the 12 months through mid-February, the highest rate since August 2002. The core rate was 3.89 percent in January.
Mexico's overall inflation rate rose to 4.1 percent in the 12 months through mid-February, above the central bank's target range of 2 percent to 4 percent.
Central bankers said after a policy meeting on Feb. 23 that they would lift the country's benchmark lending rate from 7 percent, a 2 1/2-year low, should core inflation fail to slow. They also said they were concerned that rising tortilla prices would ``contaminate'' inflation expectations and lead workers to demand bigger pay increases.
President Felipe Calderon, seeking to shore up support for his administration less than two months after taking office, arranged a price freeze with tortilla makers on Jan. 18. The rise in corn may lead to price increases at tortillerias, as small tortilla shops are known, once the government accord ends next month. Higher corn prices are also driving up the cost of livestock feed, eggs, chicken and beef.
``Risks for the peso will begin at the end of April or beginning of May when the pact ends, inflation pressures begin to mount and demand for bonds drops,'' said Luis Raul Rodriguez, head economist at Vector Casa de Bolsa SA, a brokerage in Mexico City. ``It'll be a dangerous moment.''
Under the agreement, tortilla shops agreed to hold prices at a maximum of 8.5 pesos ($0.76) a kilogram, down about 2.5 pesos from the highest prices at the time.
Calderon also dispatched 380 consumer protection agency officials to crack down on cheating and record prices at shops throughout the country. The agency began publishing those prices on its Web site to try to foster competition. They report on about 180 shops in Mexico City alone.
Enchiladas, Quesadillas
``We need citizens to call and complain and report tortilla shops that are exploiting the situation,'' Gladis Lopez, head of the agency's enforcement department, said in an interview in Mexico City. ``We're getting there.''
Historians track the tortilla back about 1,000 years, when the Mayans controlled much of present-day southern Mexico from their base in the Yucatan peninsula. A flat bread made out of ground corn, quicklime and water, the tortilla is served at breakfast, lunch and dinner in many Mexican households. It's featured in some of the country's most famous dishes including tacos, enchiladas, quesadillas and flautas.
The tortilla accounts for almost half of the calories the average Mexican consumes each day. Lula Martin del Campo, head chef at HSBC Holdings Plc in Mexico City, said there's no food that has similar importance in the U.S. diet.
``The majority of poor Mexicans use tortillas as their forks and knives,'' Martin del Campo said.
Core Inflation
Calderon's measures pushed down tortilla prices 1.3 percent in the first half of February after they rose 8.8 percent in the previous two months.
The drop slowed a surge in the core inflation rate, the price gauge most closely watched by analysts in Latin America's second-biggest economy. The annual core rate, which excludes energy and some fresh foods, was 3.95 percent in the 12 months through mid-February, the highest rate since August 2002. The core rate was 3.89 percent in January.
Mexico's overall inflation rate rose to 4.1 percent in the 12 months through mid-February, above the central bank's target range of 2 percent to 4 percent.
Central bankers said after a policy meeting on Feb. 23 that they would lift the country's benchmark lending rate from 7 percent, a 2 1/2-year low, should core inflation fail to slow. They also said they were concerned that rising tortilla prices would ``contaminate'' inflation expectations and lead workers to demand bigger pay increases.
-Sapiens
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