Mexico will increase the minimum wage by 20%, which will increase fears about inflation

On Thursday, officials said that employers, union representatives and the government of Mexico had reached an agreement on a decision to increase the minimum wage by 20% next year. However, some critics warn about the potential risk of greater inflation.

During a regular press conference with President Andrés Manuel López Obrador, Labor Minister Luisa Maria Alcalde said that the standard of minimum wage will be increased to about 207 pesos ($10.82) per day from 172.87 pesos ($9.03) per day. The wage increase for workers on the U.S.-Mexico border will come to 312 pesos per day, compared to 260 pesos per day.

Lopez Obrador took office at the end of 2018, with his goal of balancing huge income inequality in Mexico. Since his nomination, the administration implemented a double-digit percentage increase every year, which is followed by that increase.

Lopez Obrador calmed concerns about inflation by telling reporters that the last increase of minimum wage included an increase in prices for basic necessities, which means that it was calculated assuming inflation.

He said the government sees no risk of higher inflation.