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Tortillas Help Drive Mexico’s Inflation To New 21-Year High

(Bloomberg) -- Corn tortillas, the staple of the Mexican lunch table, played a central role behind the rise in inflation to a 21-year high this month as the country nears what the central bank sees as the peak in consumer prices.

Tortillas Help Drive Mexico’s Inflation to New 21-Year High
Tortillas Help Drive Mexico’s Inflation to New 21-Year High

Corn tortillas, the staple of the Mexican lunch table, played a central role behind the rise in inflation to a 21-year high this month as the country nears what the central bank sees as the peak in consumer prices.

Headline inflation, which has remained stubbornly above 8% despite the central bank’s record tightening cycle, has surged on the rising cost of food at markets, taco stands and tortilla shops. A global squeeze on commodities has also played a role, and consumers across the country are skipping out at the dinner table.

Tortillas, which are eaten across Mexico with most meals, are the base to sizzling taco meats, the accompaniment to stews, and the underside to breakfast eggs slathered in salsa.

Tortillas Help Drive Mexico’s Inflation To New 21-Year High

The corn-based staples were the third-biggest contributor to the rise in bi-weekly inflation readings released Wednesday, second to fast-food lunch spots and sandwich joints. Along Mexico’s northern border, in states such as Colima, that means tortilla sellers have raised prices as high as 26 pesos ($1.31) per kilo, up from 19 pesos mid-August last year.

In shops, tortilla prices rose 1.56% in early August compared to the previous two-week period, beating out the usual mid-year suspects, such as school costs and university expenses, and went up 13% from a year ago. Though prices were lower at supermarkets, most Mexicans opt for traditional machines to grind out fresh products.

Much of the spike is because of the rise in corn prices and transportation costs in international markets, bolstered by everything from a growing demand for corn from China, a drought in South America, and the Russian invasion of Ukraine. Mexico produces most of the white corn needed to make tortillas and uses imports largely for animal feed.

Tortillas Help Drive Mexico’s Inflation To New 21-Year High

“We’ve seen a decline in consumption of 4% to 5% because the people who have the least spend the same amount of pesos but they get fewer kilos,” said Juan Carlos Anaya, the director of Grupo Consultor de Mercados Agricolas. “The reference for the producer who’s selling his corn is the market in Chicago, which is what happens in Argentina, in Brazil and Europe.”

The current average price for corn tortillas across the country is now 21.24 pesos per kilo.

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