Mexican economic crises have had global spillover effects in the past, so SLL is watching the current problems besetting the Mexicans and their economy closely. From Don Quijones at wolfstreet.com:
It’s not all NAFTA’s fault, however.
The price of tortilla, a staple in Mexico that is consumed in myriad forms, flavors and colors, is on the rise. The country’s federal consumer association Profeco has already warned of price rises across the country, with the most pronounced increases in the states of Baja California, Colima, Quintana Roo, Guerrero, Yucatán, Nayarit, Ciudad de México, Tabasco and Oaxaca.
It’s the latest spike in an ongoing trend. In the last 10 years, average tortilla prices have soared by over 90%. Early last year prices reached as high as 16 pesos per kilo in some regions. Since then the Mexican peso has accentuated its slide against the U.S, dollar, slumping 17% in 2016 and close to 5% in the first two weeks of this year.
It was only a matter of time before the traditional bugbear of inflation began to rear its ugly head. Even before the government ushered in the new year with a brutal 20% hike in fuel prices, inflation had already accelerated from historic lows to a two-year high. In January it’s expected to surpass 1% on a monthly basis, its fasted increase since 2000. And there are already rumors of further gas price spikes in February.
As the FT warns, if the cost of mainstays of the Mexican diet such as tortillas, eggs, milk and chicken start to soar, an already unpopular government can expect snowballing protests in a country where nearly half the population lives in absolute poverty.
Profeco has already detected rising prices of other staple food, including frijoles (black beans), chicken and eggs, in some regions, although the “trend is not yet generalized.”
To continue reading: Mauled by Peso Crash & Inflation, Mexico to Cut its Dependence on US Food Producers
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This is only a problem for the Mexican political fatcats. When Mexico signed on to Nafta it destroyed the poor Mexican farmers who could grow a little extra corn in the poorest parts of Mexico. American corn displaced what they grew and took away what little cash crop they could sell. Now they will get their local market back.