Mexico seeks to contain prices as anger mounts over fuel hike

[MEXICO CITY] Mexico vowed to keep a lid on prices as part of an economic plan set out on Monday to dampen widespread outrage over a major fuel price hike, though it failed to win universal backing among business groups.

Under proposals announced by President Enrique Pena Nieto, business, government and union leaders pledged to keep the price of staple goods stable, cut salaries of senior government officials by 10 per cent and encourage capital repatriation.

"We will do everything necessary to make the gasoline adjustment affect families as little as possible," Mr Pena Nieto said, flanked by his cabinet and business leaders.

The move comes after the government hiked gasoline prices by 14 to 20 per cent on Jan 1, sparking protests across Mexico, which is already facing a slumping currency, rising inflation and economic threats from US President-elect Donald Trump.

Demonstrators have blocked roads and gas stations, and looting of shops has led to hundreds of arrests.

The accord presented by the government was thin on details and was not signed by Mexico's main employers' federation Coparmex, which criticised it for lacking clear, measurable targets and metrics to assess progress.

The rise in gasoline prices is part of a liberalisation programme aimed at gradually bringing prices up to market level. Some analysts are already expecting inflation to crest above the central bank's 4 per cent ceiling.

REUTERS