Page last updated at 09:48 GMT, Thursday, 19 June 2008 10:48 UK

Mexico caps price of basic foods

A demonstration against tortilla price rises in Mexico City, 2007
Tens of thousands marched in protest at tortilla price rises last year

Mexico has frozen the price of 150 basic foods to curb inflation, in the government's biggest set of price controls in more than a decade.

The government on Wednesday capped prices on foods including cooking oil, beans and fruit juices, with immediate effect until the end of 2008.

Mexico's government is concerned about the impact of soaring food bills.

Overall consumer price inflation was 4.95% over the past year, but food price inflation was far higher at 8%.

It is a measure that will benefit positively and directly millions of Mexicans
President Felipe Calderon

Last year, Mexicans took the streets in protest over a sharp rise in the price of tortillas, maize-based pancakes that are an important part of the national diet.

President Felipe Calderon said the move would "benefit positively and directly millions of Mexicans".

He said: "This reflects the commitment Mexican business people have to the country and to price stability."

It is the latest in a series of government moves to stabilise food prices.

In May, Mr Calderon's National Action Party announced a temporary suspension of import tariffs on maize, wheat, sorghum and dried milk.

That same month, it also announced monthly cash payments of 120 pesos ($11.55; 5.85) for the poorest citizens.

But some economists believe that price controls do more harm than good in the long term, because they bottle up inflationary pressures that damage the economy further down the line.




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