MEXICO CITY, FEB. 29 -- The Mexican government, trying to curb the nation's high inflation rate, said today it will freeze the peso's exchange rate and the prices of all state-controlled goods and services during March, while allowing moderate wage increases.
The month-long economic program, outlined in government decrees published today and going into effect Tuesday, is being portrayed as the second and final phase of a new inflation-fighting plan begun in mid-December by the administration of President Miguel De la Madrid.
By stopping the daily slide of the peso against the dollar, the government is indicating that it received "at least a moderately positive response" to the new bonds it auctioned off to foreign creditors Friday in exchange for outstanding debts, one private economist said.
If the innovative bond offer were perceived to have failed, it would have placed strong speculative pressure on Mexico's currency and could have led to a further devaluation, according to the economist, who asked not to be identified.
Jose Angel Gurria, Mexico's chief debt negotiator, was analyzing results of the auction here today with Treasury Secretary Gustavo Petricioli. Mexico's response to the bids is not expected until Tuesday or Wednesday, sources said.
The price freeze will affect items ranging from gasoline, water and electricity to air fares and refined sugar. The prices of basic household products produced privately but subject to government controls also will be frozen through March. Merchants and manufacturers are being pressed to keep other prices down.
The government is also ordering an immediate 3 percent across-the-board pay hike for all wage earners. Though far below the 10 percent raise demanded by government-affiliated unions, the settlement was reluctantly endorsed by the official labor movement. Veteran labor boss Fidel Velazquez warned today, however, that if business does not keep its promise to hold down prices "it will have to pay the consequences" with higher wages.
In the first stage of its new economic program the government loosened price controls, cut state spending, and sharply raised most public sector prices.
Mexico's 12-month inflation rate hit an all-time year-end peak of 159 percent in December. In January consumer prices rose an additional 15.5 percent.
Central bank figures, however, showed a slight improvement during the first two weeks of February. The government's goal is to slow inflation to 4 percent a month from March through July. In the second half of 1988 inflation will drop to 2 percent monthly, officials predict.
Private analysts here said that while the new policies should succeed in braking inflation for the next few months, only sustained cuts in public spending will keep prices and interest rates from soaring anew. The government in recent weeks has announced new budget reduction measures, including the accelerated sale of money-losing state industries, but many economists contend these moves have only a minimal impact on the deficit.
Government officials have also cautioned the public not to expect swift, dramatic results.
"Inflation will not be stopped overnight," De la Madrid said in a recent speech. "Inflation will continue to be a major feature of the Mexican economy for some time to come."