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Weekly Report - 19 January 2017 (WR-17-02)

MEXICO: Trying to soften gasolinazo blow

Following another week of widespread protests against the sharp increase in petrol prices (locally dubbed ‘gasolinazo’) that came into effect on 1 January after the elimination of longstanding government subsidies [WR-17-01], the Mexican government led by President Enrique Peña Nieto has been busy coming up with ways to mitigate the impact of the price increase on households and businesses. These include increased social spending and the promise of tax breaks to reduce the loss of purchasing power that Mexicans are experiencing on the back of the price increase, which along with the continued depreciation of the peso against the US dollar (see sidebar), is stoking inflation. It is not yet clear, however, if these concessions will be enough to ease the general discontent.

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