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Firms to split food discount costs

January 24, 2008|Marla Dickerson | Times Staff Writer

MEXICO CITY — Feuding Mexican food manufacturers and supermarket chains agreed Wednesday to split the costs of a program aimed at cutting grocery bills for millions of shoppers.

Under the deal, business leaders agreed to support the government's call to help keep inflation in check by lowering prices temporarily on staples such as powdered milk, eggs, rice and chicken.

At the government's urging, Mexico's big grocery chains this month slashed prices on dozens of products through the end of March.

Consumers have been delighted by savings as high as 30%. But manufacturers cried foul, claiming that big retailers were forcing them to bear the costs of discounts and pay for advertising expenses as well.

At a meeting with Eduardo Sojo, Mexico's economy secretary, grocers and manufacturers agreed that participation would be voluntary and that discounts would be shared by both retailers and suppliers.

The spat underscores concerns in Mexico and other Latin American nations over rising consumer prices. Inflation in Latin America accelerated to 5.9% last year, up from 4.9% in 2006, according to a report by Morgan Stanley, which fingered food as the major culprit.

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marla.dickerson@latimes.com

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