Consumer Purchasing Power Depends on Prices
Higher prices mean lower purchasing power
Photo by Roberto Arcide on Unsplash
Prices in Mexico are being pressured. On one hand, you have corporations that are using artificially created shortages and speculation to raise prices. Then you have us, normal citizens, looking to stretch our "buck" as far as possible.
We need to understand that prices in Mexico are not determined by anybody other than ourselves, the consumer. I think We, the People, have a great opportunity to increase our purchasing power and dictate prices to have a lower cost of living in Mexico.
You set the price
Products are meaningless unless people want to buy them. This is called purchasing power. I have read that consumer purchasing power is the amount of goods and services that a unit of currency can buy at a given time.
I disagree, consumer purchasing power is the price that we decide to purchase an item at. Nobody and I do mean nobody, has the power to set prices except the consumer. Otherwise,
Prices in Mexico are out of control because of speculation. As if the roughly 3 million unemployed in Mexico are going to magically start spending money tomorrow. But, we just got a very powerful ally that feels the same as us and will pressure prices to go down.
A lot is changing in Mexico for Mexico
For me, Mexico is a model for what a country should do after years of failed policies. And I have to say that it is long overdue. I have seen a considerable amount of change in my 17 years living in Mexico and I see more coming for the near future.
The first and most important being back in 2004 when the PRI and PAN saw that our current president, Andres Manuel Lopez Obrador, was a threat to the "status quo" in Mexico.
The whole case was theater at its best. Vicente Fox, the president at the time, used a road to a private hospital in Santa Fe to bring charges against Andres Manuel Lopez Obrador for violating Mexican law.
AMLO was found to be in defiance of a court order because Federico Escobedo Garduno, the owner of the road, was being denied access to the road due to construction equipment not removed immediately.
While the alleged transgression seems minor, criminal charges in the matter wouldn't be: If charged, Andres Manuel Lopez Obrador, the front-runner to replace President Vicente Fox, would be barred from running for office during the duration of the trial.
Since 2004, Lopez Obrador has been fighting for change in Mexico and others have continued to resist the will of the people, such as Rosario Robles.
She was the mayor of Mexico City responsible for seizing the plot of land and is the same individual that introduced Carlos Ahumada in 2004 to René Bejarano. Shortly after the introduction, another so-called scandal surfaced when a video emerged showing Ahumada giving large amounts of money to Bejarano for supposed favoritism to his company.
She is also the same person who is now involved in a corruption case involving the pocketing of more than $250 million dollars, known as La Estafa Maestra, from social programs in Mexico.
Like I said, the first major change because an actual trial took place that forced Mexico to change laws about how citizens would be judged. Civil rights would no longer be suspended until individuals are found guilty. Before, you could end up dead or in prison for life without a trial.
President Andres Manuel Lopez Obrador has begun to act so that Mexican citizens, not just international companies, prosper and we are no longer taken advantage of.
The first was replacing the head of Profeco, the consumer watchdog in Mexico, Ricardo Sheffield. Now, he has given an ultimatum to companies that continue to rip-off consumers in Mexico.
Inflation is being pushed by rising energy prices
I continue hearing that the cost of living in Mexico is low. Anything in Mexico is cheap if you convert prices to dollars. Reality does not work like that. If you are going to live in Mexico, then you need to think like Mexico.
Today, current data suggests that 40.7% in Mexico cannot buy the basic food basket. Why do you think? Purchasing power has decreased as prices in Mexico keep going up while income continues to go down.
Inflation is supposed to happen when there is too much money circulating in the economy and I don't see the majority of people in Mexico splurging on things they do not need. Inflation in Mexico closed at 3.15% in 2020, but is at 3.84% through February of 2021.
Most of it is attributed to rising energy prices. But energy prices are going up due to pure speculation and not based on concrete data that shows everyone has more money to spend.
I talk in my Guide: Living Comfortable in Mexico City about actions you can take to enjoy your time in Mexico. Look into it because I stress areas where individuals are taken the most advantage of. One being when you purchase gas either for your car or for domestic use.
You do not get what you pay for in Mexico
A big scam that has been going on since I have been here and I am sure way before we moved to Mexico is getting ripped-off at the pump. You get shorted in the liters you buy.
Since it most likely will become a thing of the past, I am going to let you know how you can avoid being scammed from receiving full liters at the pump. Here is the big secret. You should always buy gasoline by asking for 20 liters and not by asking to "fill the tank".
The only reason gas stations have been getting away with stealing for so long is because Profeco checks that full liters are being dispensed by filling 20 liter containers when inspecting gas stations.
The machines are set to give the full amount when 20 liters is selected at the pump. Profeco caught on and started to take apart the machines and found that devices were in place to give 75% of what you purchased.
As individuals continued noticing that it was costing more each time to fill their tanks, Profeco stepped up with more surprise inspections. They uncovered that gas stations were now using remote devices to trigger the pumps to give incomplete liters.
It is also common practice when buying gas for domestic use. You pay anywhere between $450 and $510 pesos for a 20 kilogram gas tank. However, gas tanks are filled with sand to make them heavier because they are filled at about 80% capacity.
The ultimatum to gas providers
When gas goes up, everything goes up. However, prices should not go up purely to increase profits. I see no data suggesting that costs of production in Mexico have gone up enough to justify a 15% increase in prices. Neither has President Andres Manuel Lopez Obrador.
Since he took office, AMLO, has been patient with companies in Mexico. He assumed that they would do what was right and stop ripping-off consumers. I guess they thought it was business as usual and did not adjust their practices.
On March 11, President Andres Manuel Lopez Obrador announced that gas providers will lose their permits if they do not stop cheating customers. He said that gas stations found not distributing complete liters will not be able to operate any longer.
AMLO also mentioned that new permits will be given to increase competition. This should make international markets happy because neoliberalism champions itself in that increased competition leads to lower prices.
A lot of struggles and benefits seen in the future of Mexico
Putting an end to the gasolinazos was a campaign promise of Andres Manuel Lopez Obrador. He now sees the need to act because you cannot trust people to do the right thing.
Just look at this article about how Pfizer execs say there's a 'significant opportunity' to hike prices of its COVID vaccine. They are taking advantage of a horrible situation by creating a vaccine that needs to be taken every so often instead of developing a vaccine that actually cures you.
President Andres Manuel Lopez Obrador has been laying the ground work and preparing Mexico for exactly this moment. It is the same strategy used when he put 10-foot barriers to wall off the presidential palace during protest in Mexico City on International Women's Day.
He was preparing for the vandalism of the so-called peaceful march in Mexico that left at least 81 individuals injured, of which 62 were police officers. It had nothing to do with making women an enemy as it was stated in the news.
On the other hand, changes have been made in the last year that will increase your quality of life in Mexico and lead to a better standard of life as well.
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