MEXICO CITY — Sharp increases in the price of fuel, sugar and electricity have set off a new round of inflation and brought harsh criticism of President Miguel de la Madrid's government.
The higher prices come at a time when the government is negotiating new minimum wage levels with business and union representatives. Labor leaders are asking for an 85% increase, and industry has offered 30%. The government usually has the last word in these matters.
By the end of November, the inflation rate for Mexico had reached an annual rate of 59%. The new price levels are sure to push the rate over 60% by year-end, far above the 35% forecast.
Protests over the new prices, especially the 50% rise in gasoline prices that was announced last week, have been limited so far to verbal attacks on the De la Madrid government.
Angel Olivo, president of the Labor Congress, a trade union federation, complained that "price increases are authorized every day, but wage increases are either denied or handed out in small doses."
Gonzalo Altamirano of the conservative National Action Party described the higher prices as "exorbitant and unjust."
While the protests have not gone beyond talk, reverberations have been felt rapidly and throughout the country.
In Mexico City, taxi drivers are campaigning to quintuple their fares. In Nezahualcoyotl, a sprawling squatter community at the edge of Mexico City, workers stoned bus drivers because the fares had been raised over the weekend to keep abreast of the higher prices.
According to reports reaching the capital, taxi and bus fares in towns and cities as far away as Matamoros, on the Texas border, and Acapulco on the Pacific Ocean have been increased.
At the port of Mazatlan, shrimp fishermen warned that they might tie up their vessels because the price of shrimp is not keeping up with the cost of fuel.
In Tijuana, people were crossing into the United States to buy bottled gas, which had suddenly become cheaper in California than in Mexico.
The price of sugar and electricity has gone up by 40%. Still, regular gasoline now costs only about 70 cents a gallon, compared to more than $1 in the United States.
The price increases are seen as an attempt by the government to reduce subsidies on goods and services that it provides. The oil industry is government owned, and the sugar industry is heavily subsidized. Several officials have proposed that bus and subway fares, which are also subsidized, be raised in an effort to reduce government spending.
Labor leaders representing about 11 million workers will negotiate a new minimum wage this month. In Mexico, the minimum wage is set every six months, and the recent price increases are expected to make for a more generous wage adjustment than usual.
"The government is giving us more arguments for demanding a wage increase," said Fidel Velasquez, leader of the Mexican Labor Federation, a large organization affiliated with the ruling Institutional Revolutionary Party.
Oil Revenue May Drop
Besides spiraling prices, there may be more bad news for the De la Madrid government in its struggle to strengthen the Mexican economy. Prices for its principal export--petroleum--may decline sharply if a price war breaks out among the members of the Organization of Petroleum Exporting Countries. OPEC members decided Monday in Geneva to stop trying to enforce price and production quotas.
World oil prices range from about $25 to $30 a barrel and, according to some experts, could be driven down $5 or more if severe competition develops. Any such decline would sharply reduce Mexico's foreign earnings, imperil government programs that mean jobs for thousands of people and cripple Mexico's already fragile ability to pay off its $96-billion foreign debt.