(Bloomberg) -- Mexican President Claudia Sheinbaum said she plans to hike the minimum wage by about 12% in 2025 and subsequent years, increases that would be well above inflation in Latin America’s second-largest economy.
Sheinbaum’s goal is to increase the minimum wage until it covers the cost of roughly two and a half basic food baskets, she said Thursday at her daily press conference. Annual inflation was 4.66% in early September and the central bank targets consumer price rises at 3%, plus or minus one percentage point.
“We worked on this at the time with economists, so that it does not affect inflation,” Sheinbaum said, adding that most of the businesspeople who have discussed the proposal with her government agree with it.
Mexico’s central bank has cut its benchmark interest rate in each of its last two meetings and indicated that more reductions are in store. Policymakers started easing later than regional peers due to factors including stronger-than-expected economic growth and higher public spending before June’s presidential vote.
Sheinbaum’s minimum wage increase proposal, however, would be smaller than the last hike ordered by her predecessor, Andres Manuel Lopez Obrador, who raised base pay for workers by 20% this year.
Mexico’s minimum wage is agreed to by the government, unions and companies.
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