The drop in prices is notable in foods of plant origin and is due to greater inflationary control in the countries of the bloc. However, countries like Peru register an opposite trend.
After 12 years of existence, the members of the Pacific Alliance not only face diplomatic tensions over the legitimacy of the Peruvian government of Dina Boluarte. The global rise in inflation and the exchange rate have not been foreign to this conglomerate of countries (Peru, Mexico, Chile and Colombia) that account for 40% of Latin America's GDP. This trend towards rising prices of goods had a direct impact on the prices of the basic family basket in 2022. However, the upward trend has been reversing slightly, thanks to the decrease in inflation in the mentioned countries.
Gaps between the countryside and the city
During the first half of 2023, Mexico has experienced a slowdown in inflation levels. According to data from the National Consumer Price Index (Inegi), in August 2022, the alarming figure of 8.77% annual inflation was obtained. In contrast, for June 2023, an index of 5.18% was recorded. This recovery has been noticed mainly in urban locations. Well, according to figures from Coneval (National Council for the Evaluation of Social Development Policy), in May, the basic basket was priced at 4,280 pesos per month per person (US$ 250.3). While the inflation of these products was 6.3%, a figure opposite to the 15% it reached in some months of 2022. This marked two consecutive months of decline in the price of the minimum basket.
However, the rural towns of Mexico live a diametrically opposite reality. Thus, in May of this year, the basic basket was priced at 3,091 pesos per month per person (US$ 180.7). This level was the first to register a drop in the price level. Along the same lines, the interannual inflation of the rural minimum basket was 7.8%, a figure notably higher than in the cities. It should be noted that Coneval estimates that an urban family of four people needs 17,120 pesos per month (US$ 1,001), considering expenses on food, transportation, hygiene products, health and education, while a rural family requires 12,364 (US$ 723) monthly pesos to cover the same needs.
In turn, the government of Andrés Manuel Lóepz Obrador (AMLO) has signed a series of agreements with producer businesses to contain the rise in food prices. These efforts were particularly incisive at the end of 2022, when annual inflation was still in double digits. Thus, in October of last year, the AMLO administration presented the Package against Inflation and Famine (Pacic) with producers of corn, eggs, meat and corn flour, and retailers such as Walmart and Soriana. The Mexican Secretary of the Treasury, Rogelio Ramírez de la O, presented the plan that committed producers to set the prices of 24 products in the basic basket at 1,039 Mexican pesos. At that time, this sum was equivalent to US$51.83, while today it amounts to US$60.9, as a consequence of the decline in inflation.
While in Peru, by May 2023, the National Institute of Statistics and Informatics (INEI) indicated that the price of the basic basket was S/. 415 (US$112.8). On the other hand, June would be especially critical for certain essential products: the INEI registered the increase in prices of 371 products in the family basket. Among the main foods were fruits such as mango (23.83%) and white grapes (17.54%). Inexpensive fish such as bonito (27.93%) and mackerel (11.59%) also recorded notable increases. While dairy products also followed an upward trend, although more discreet: evaporated milk had an increase of 1.0% and fresh cow cheese, 0.8%.
However, other common foods saw price declines. This is the case of gutted chicken, chicken eggs and white potatoes, which together contributed a negative balance of -0.47% in the price variation. While overall, consumer prices in Metropolitan Lima decreased by 0.15%. This trend had an impact on the Andean country's annual inflation, which stood at 6.46% in June. It has been the lowest figure since an index of 6.82% was recorded in March 2022.
However, the decline in inflation has not been accompanied by new government aid policies for vulnerable populations. The last initiative of this type was in October 2022, when the Ministry of Development and Social Inclusion (Midis), then led by the current president Dina Boluarte, organized the delivery of a food voucher of S/. 270 (US$ 73) for vulnerable populations. The collection period expired in April 2023 and the issue has not been discussed again in the Peruvian Executive.
Decrease in the price of vegetables
Likewise, in Colombia, the Ministry of Agriculture projected a drop in the prices of the family basket for the month of June. A figure that contrasts with the tendency to grow in the price of the basic basket in recent months: for January 2023, the cost was 292,650 pesos (US$ 70.1), 28.61% more than a year back. Unlike Peru, the downward curve finally manifested itself in vegetables, sugar and fruits, due to the high supply that caused the increase in harvests, especially in the departments of Antioquía, Huila, Boyacá, Cundinamarca and Valle del Cauca. While beef, as well as chicken breast and leg, maintained their upward trend, although to date, no specific figures have been obtained.
However, local authorities have begun to react to the rising cost of the basic basket. For example, the Mayor's Office of Medellín has arranged the delivery of 32,340 food vouchers in five deliveries for each beneficiary. Two months earlier, the Bogotá Mayor's Office did the same by organizing an exchange of a subsidy for basic necessities for 13,000 people in a state of disability and extreme poverty. The distribution of this food bonus had the support of the Secretariat of Social Integration.
Finally, in Chile, the Undersecretary of Social Evaluation announced on June 16 that the basic food basket had registered another monthly drop, the third in a row. According to the report, the price of these products decreased 0.5% in May, standing at 63,741 Chilean pesos (US$ 79.5). It is worth remembering that the first drop in the indicator was in February (-1.2%), the second in April (-0.5%) and the third in May (-0.5%). Similar to the Colombian case, the main foods that registered a decrease in prices were mostly of plant origin: lemon, banana, apple and coffee substitute, among others. To be specific, a total of 39 of the 79 products in the Chilean basic basket decreased in value between April and May 2023. In contrast, the foods that obtained the greatest increases were tomatoes, chicken eggs and mineral water.
To counteract the situation, the government of Gabriel Boric has placed emphasis on social aid through the Basic Food Basket Contribution program. This is a subsidy for vulnerable families that provides the minimum amount needed to purchase a basic food basket. This sum is determined month by month by the Ministry of Social Development and Family. Since its initial implementation in May 2022, the bond has gone through periods of notable increases and slight decreases. It was first quoted at 7,342 pesos (current US$9.1), while in March it was valued at 14,061 pesos (US$17). However, in April, the amount fell to 12,386 pesos (US$15.4). The delivery of the Food Bonus will continue throughout 2023 by the Social Welfare Institute of Chile (IPS). It is not subject to application, but is given to all those people who met the economic vulnerability requirements.
Neighborhood businesses in Argentina
However, the fluctuations in the cost of the basic basket in the members of the Pacific Alliance are not comparable to the Argentine case. With annual inflation of 114.8% by May 2023, the Ministry of Commerce was forced to expand the scope of social assistance in food matters. On June 1, 2023, the Precio Justos Barriales agreement was determined, a project that offers a basket of products in nearby stores. The initiative consists of setting the value of a list of more than 100 everyday consumption items. These include food, dairy, beverages, hygiene, staff and cleaning.
These prices will remain stable until next July 15, with an increase pattern of 3.8%. The measure, which seeks to alleviate the weight of inflation on the pockets of Argentines, also aims to bring the supply closer to neighborhood warehouse and self-service businesses. It represents a great advance compared to the original Fair Prices agreement that only covered supermarket chains. The agreement was determined between the Argentine State, wholesalers, distributors and mass consumption companies in a desperate attempt to balance attractive prices and reasonable profits, according to the Ministry of Commerce.
