MEXICO CITY (Reuters) – Mexico will improve manufacturing of staple meals equivalent to corn, rice and beans as a part of a plan agreed with enterprise leaders to regulate shopper worth inflation which is at a two-decade excessive, Finance Minister Rogelio Ramirez de la O mentioned on Wednesday.

Ramirez was talking at a information convention alongside President Andres Manuel Lopez Obrador, who mentioned the plan aimed to make sure honest costs for a basket of staple meals. Mexico was not planning to use worth controls, Lopez Obrador mentioned.

The plan can be in place for six months and might be renewed if mandatory and agreed on with enterprise leaders, mentioned Ramirez, including he anticipated a near-term influence on inflation expectations for fundamental items.

Mexican annual inflation reached 7.72% within the first half of April, an over 20-year excessive which may immediate extra rate of interest will increase by the central financial institution.

Goldman Sachs (NYSE:) economist Alberto Ramos referred to as rising the provision of meals and grains, lowering import tariffs and staying away from coercive measures and outright worth controls “optimistic developments.”

However Ramos underscored that it was unclear how meals provide would improve considerably within the short-term, and mentioned any extra native meals and grains provide was prone to nonetheless be dearer as a consequence of rising fertilizer and manufacturing prices.

“The worldwide and LatAm expertise with worth controls and ‘voluntary worth agreements’ shouldn’t be optimistic since they are typically very ineffective past the very short-term to maintain inflation underneath management, create distortions in relative costs, and repressed costs normally result in bigger will increase in a while,” mentioned Ramos.

Nonetheless, a few of Mexico’s most essential companies backed Lopez Obrador’s anti-inflation plan.

Billionaire Carlos Slim, Mexico’s richest man, had informed the federal government his Mexican phone companies Telmex and Telcel, items of America Movil (NYSE:) wouldn’t elevate costs for the remainder of 2022, in accordance with Ramirez.

Lopez Obrador mentioned Mexican grocery store chains equivalent to Chedraui and Soriana supported the anti-inflation plan.

Breadmaker Grupo Bimbo additionally backed the initiative, and is ready to keep up its white bread costs for six months, firm government Liliana Mejia informed the information convention.