Mexico’s annual inflation reached a 21-year high in March, with consumer pricing rising by 7.45% from a year earlier, above the estimate of 7.38%. The country’s central bank, Banxico, said inflation would peak in the first quarter, then slow to 5.5% by the year’s end. However, this is still way above its target of 3%.
Rising inflation has become a political headache for President Andres Manuel Lopez Obrador, who said earlier this week the government is working on a plan to control the price rises on food.
Bimbo said it has had preliminary talks with the government about bread prices, but CEO Daniel Servitje confirmed on a conference call with analysts that it is considering more price increases to offset spiking costs.
Record levels of Q1 sales
Despite the mounting challenges, Grupo Bimbo posted a 17.8% increase in sales to 93.32 billion pesos ($4.5bn).
In Mexico, sales improved by 19.5%, attributable to volume growth, favourable product mix, and price increases, while in Latin America as a whole, net sales (excluding the FX effect) increased 25.1%.
North America saw net sales growing 18.8% in dollar terms. EAA reported a 21.1% increase, in part driven by the contribution from the acquisition of Modern Foods and Kitty Bread in India.
“We had a very strong start in the year, [reaching] record level of sales for our first quarter and gaining market share in several categories,” said Servitje.
He noted Bimbo’s salty snacks, buns and rolls, snack cakes, pastries and confectionery categories outperformed, along with its QSR business and performance in Mexico and Latin America.