Mexico Boosts Minimum Wage, Freezes Prices, Peso

MEXICO CITY — The government has authorized a 3% increase in the minimum wage in March and ordered a freeze in official prices and the value of the peso.

The new measures, announced late Sunday, marked the government’s most aggressive attempt yet to rid the nation of its No. 1 economic problem, inflation.

President Miguel de la Madrid told a meeting of labor, business and farm leaders: “The national motto is no increase in prices in the month of March.”

Labor leader Fidel Velazquez worried, though, that merchants would quickly mark up their prices before today, the first day of the freeze.

“Prices in March are going to try to be checked . . . but last night and today they have been raising them,” he contended late Sunday.

The small increase in the minimum daily wage to 8,000 pesos--about $3.50--was a blow to Velazquez and his 3-million-member Mexican Labor Federation, which had been pushing for a 10% gain.

Workers, he said, have agreed to “put the interests of the country ahead of their own interests.”

About half the nation’s 25 million workers are estimated to earn the minimum wage.

Analysts calculate that the purchasing power of workers’ making the minimum pay has deteriorated to about half of what it was in 1978.

De la Madrid said he was quickening the pace of his inflation-fighting program, unveiled in mid-December, because fresh price figures showed “an important de-acceleration” in February.

Predicts Slower Pace

Consumer prices, he predicted, would rise in February at about half the record 15.5% of January. Last week, the government announced a gain of 8.7% in prices in the first half of February.

Jonathan Heath, senior economist at the forecasting firm of Macro Asesoria Economica, predicted an inflation rate of about 8.5% in February and 5% to 5.5% in March.

The new economic program, he said, appears to be successful so far. But, he added, “we can’t look at short-run indicators.”

“We want to see if it is a permanent drop and the government is not inducing a temporary, artificial drop. We want to make sure it’s a permanent, once-and-for-all drop in inflation,” he said.

The government had been expected to release a target level that would be used, starting today, to index wages and prices. The indexing plan was designed as the centerpiece of the anti-inflation program, called the Economic Solidarity Pact.

The government drew up the Solidarity Pact because of worries that the nation was on the verge of hyper-inflation.