Mexico gasoline prices to rise as much as 20.1 per cent in January

MEXICO CITY: Mexican gasoline prices will rise by as much as 20.1 per cent next month compared to the highest recorded prices in December, the government said on Tuesday, as part of a programme to end years of government-set prices at the pump.
In a statement, the finance ministry said the widely used Magna gasoline brand will rise 14.2 per cent and will sell at an average price of 15.99 pesos (78 cents) per litre at retail, while Premium fuel will go up 20.1 per cent to an average of 17.79 pesos per litre. Diesel will rise 16.5 per cent, with an average price of 17.05 pesos per litre.
The ministry’s price ceilings will be in effect through February 3. After that, the maximum price will be set bi-weekly, until February 18, when it will be set daily.
“It’s an important change,” Finance Minister Jose Antonio Meade said in a local radio interview. ”It’s a change that will allow prices to reflect costs, and avoid artificial distortions.”
Analysts said the liberalisation programme was likely to have an impact on inflation, which has already passed the central bank’s 3 per cent target due to a sharp peso depreciation.
“This is a positive in the long term, but even so, in the very short term, clearly these (price) rises… will result in inflationary pressures for consumers throughout 2017, and we’ll see a deceleration of internal demand,” said Alejandro Cervantes, an economist at bank Banorte. Earlier this month, the energy regulatory commission said a staggered fuel price liberalisation will begin at the end of March and extend through the rest of 2017.
The move will phase out government-set gasoline prices, a practice that has prevailed in Mexico for decades, and replace them with market prices.— Reuters