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 Business News | January 2008 
Mexico Retailers Cut Prices to Fight Inflation
 Cyntia Barrera Diaz - Reuters
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Mexico City – Mexico's leading retailers have agreed to cut prices on 300 household goods from Thursday through the end of March as part of a government-backed plan to fight inflation. Powdered milk, beans, pasta, eggs, soap and shampoo are on a broad list of products that will come down in price, said Vicente Yanez, head of the retail association ANTAD.
“Inflation in Mexico has cost us dearly,” he told the Televisa network.
Mexican inflation came in at 3.76 percent in 2007, within the central bank's target range and one of the lowest in recent years. But global demand for food commodities and increased amounts of grains being diverted for use in biofuels are expected to push prices higher this year.
Mexico's central bank said in its most recent quarterly report that inflation would hover above 4 percent for most of this year before falling toward its 3-percent goal by the end of 2009.
Members of ANTAD, the National Association of Retailers, include leading retailer Wal-Mart de Mexico Soriana and Comercial Mexicana. Retailers, which had a rough ride in 2007 due to weak consumption and a slowing economy, expect to lure more customers with the discounts but analysts think suppliers could become the weakest link.
“From a first glance, (the price rollback) could be good for retailers as these kind of deals could boost store traffic and the real impact is transferred to the producers and suppliers,” said an analyst who asked not to be named.
Walmex, a unit of U.S. giant Wal-Mart Stores , plans to cut prices on over 300 products, a company spokesman said Thursday. He declined details on the range of discounts.
The company makes price cuts on different products, from mayonnaise to blenders, throughout the year. But at least twice in 2007 it had a broad-base reduction for dozens of household goods for at least 30 days.
According to preliminary ANTAD data released last week, its members' same-store sales may have risen only 1.1 percent in 2007, compared with 4.3 percent in 2006.
(Editing by Theodore d'Afflisio) |
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