Increase in Subsidy for Regular Gasoline

For the second week in a row, the price per liter of regular gasoline in Mexico will include a discount on the applicable Special Tax on Production and Services (IEPS), as reported by the Ministry of Finance and Public Credit (SHCP). For the week spanning from October 19 to October 25, the rate for regular gasoline will be set at 5.90 pesos per liter, implying a subsidy of 4.35%, or 0.26 pesos less compared to the previous week’s subsidy of 3.93%, which amounted to 0.24 pesos, as the agency detailed this Friday in the Official Gazette of the Federation.

As for premium gasoline, it will not receive a subsidy, so the IEPS rate applied will be 5.21 pesos per liter. Regarding diesel, its rate will be 6.78 pesos, also without any discount. This situation has been the standard throughout the year for these two fuels. When international oil and fuel prices rise, the Treasury offers a subsidy on the IEPS for gasoline in Mexico, aiming to mitigate the impact of these increases on the domestic market. It’s important to consider that providing these subsidies results in reduced IEPS revenue for the public sector.

As of October 18, the average price per liter of regular gasoline is 23.99 pesos, premium gasoline is at 25.39 pesos, and a liter of diesel is selling for 25.54 pesos, according to information from PetroIntelligence.

Gasoline subsidies, while helping consumers cope with rising prices, also create economic pressure on the government budget. It’s vital that these supports are managed responsibly so they do not compromise public finances in the long run. Striking a balance between immediate relief for consumers and the fiscal health of the country will be essential for a sustainable economy.