As Mexican inflation soars, President Felipe Calderon shakes up Economic Ministry

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As Mexico wrestles with soaring inflation and interest rates, falling oil production and shrinking remittances (money sent home by Mexicans working in the U.S.), President Felipe Calderon on Wednesday announced a shake-up at the Economic Ministry.

Secretary of the Economy Eduardo Sojo is being replaced by Gerardo Ruiz Mateo, Calderon’s former chief of staff and a close political ally.

Sojo, who is being shunted to Mexico’s national statistics agency INEGI, served as chief economic advisor to Calderon’s presidential predecessor, Vicente Fox. But the veteran U.S.-educated economist has come under fire as Mexico struggles with its highest inflation in 3.5 years.

Accords that Sojo negotiated with Mexican retailers and manufacturers to freeze prices on some pantry staples have done little to stem inflation, which hit an annualized rate of 5.26% in June. Food inflation is nearly double that.

Meanwhile, the pacts alienated some business allies of the conservative Calderon. Some economists have also criticized them as gimmicks that could lead to even bigger price increases down the line.
Ruiz Mateo, an industrial engineer by training, is a former auto parts executive and ex-president of a major business trade group.

Calderon said Ruiz Mateo’s private-sector experience would aid him in his new Cabinet post because ‘he has lived and suffered the condition of businesses in Mexico and he’s been on the other side of the counter.’

Click here for the details on Calderon’s shakeup.

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-- Deborah Bonello in Mexico City