Newspaper article St Louis Post-Dispatch (MO)

Mexico Sets Wage, Price Restraints

Newspaper article St Louis Post-Dispatch (MO)

Mexico Sets Wage, Price Restraints

Article excerpt

President Ernesto Zedillo signed an accord for emergency wage and price restraints Tuesday, promising to stabilize a battered peso and combat the threat of spiraling inflation.

The peso, however, weakened further on market fears of surging inflation, sliding from 4.925 to close at 5.325 to the dollar. Traders said they believed that the government's plan would not do enough to bring the crisis under control.

As Zedillo introduced his emergency accord with businesses and unions, he promised to avert wage and price inflation following the peso's nearly 30 percent slide in the past two weeks.

"Mexico is confronted with a serious economic crisis that will invariably affect the population and demand sacrifices by all," Zedillo said in a nationwide televised address.

He said that any inflation caused by the devaluation would be "transitory" and called on Mexicans to join him in enforcing wage and price restraints to avert any further devaluation or inflation cycles.

"The objective of this agreement is to re-establish confidence," said Zedillo.

He called for a special session of the Mexican congress to examine the proposals and warned his nation of 90 million people, many of them struggling, that austerity measures would have "painful effects" for all.

Under the accord, business leaders pledged to refrain from raising prices on all but imported goods, while workers were ordered to do without substantive wage increases following the peso's steep slide. …

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