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Article Excerpt
The decision by President Felipe Calderon's administration and the Congress to impose a tax on gasoline and diesel as part of the recently approved reforms to the tax code unleashed a wave of speculation that caused consumer inflation to rise rapidly in Mexico. Some of the changes to the tax code were to go into effect during the fall, but Calderon issued an executive order to freeze fuel and electricity prices at current levels until the start of 2008, in effect suspending implementation of the gas tax. The president announced the decision to freeze energy prices to help reduce inflationary pressures, as consumer prices rose at a much faster rate than anticipated during September.
The tax reform, which closes corporate loopholes in addition to boosting the gasoline tax, was approved overwhelmingly in Congress in September (see SourceMex, 2007-09-19). Some merchants started to increase prices in anticipation of higher fuel costs down the road, which prompted the administration to announce the freeze on energy prices for the rest of 2007. The Banco de Mexico reported the consumer price index increase (indice nacional de precios al consumidor, INPC) at 0.62% in...
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