Mexico City, May 15 - Mexican tortilla prices were steady on the streets of the capital on Thursday, despite warnings from an industry group of an imminent price hike that rattled bond investors.
Tortilla shops visited by Reuters and by local radio journalists found prices unchanged from previous weeks at 8.50 pesos per kilogram (about 37 cents per pound).
Mexican newspapers had reported on Wednesday that tortilla prices could jump to as high as 12 pesos per kilogram on Thursday, citing the head of a small industry group.
The newspaper reports spooked investors, who dumped bonds and bid up yields on interest rate futures on bets that rising inflation could force the central bank to raise interest rates.
But staff working at tortilla shops said on Thursday they had heard of the forecasts of price increases only through the media.
"Nobody told us anything about price increases," said a store manager who asked to be identified by his first name, Juan.
Tortillas are thin pieces of unleavened cornbread that are often wrapped around spicy meats and vegetables. They accompany most traditional Mexican meals, and price rises in the staple can stoke inflation.
The head of a major industry group said on Wednesday that prices would rise, but not as high, nor as quickly, as the smaller tortilla-maker group had said.
Rafael Ortega, who heads the National Chamber for the Tortilla and Dough Industry, told Reuters on Wednesday average tortilla prices should rise to 10 pesos ($0.94) per kilo in June. His organization groups together about 40 percent of the nation's tortilla makers.
WARY MARKETS
On Thursday, bond prices mostly recovered and yields on interest rate futures edged down, showing that investors were worrying less about tortilla-fed inflation but still were wary.
"It seems prices could go up to 10 pesos, but even that would have an effect (on inflation)," a bond trader said.
Global food prices have surged in recent years on bad weather, higher demand from countries like China and the rise of the biofuel industry.
Thousands of people took to the streets last year to protest higher tortilla prices, though Mexico has not experienced nearly as much unrest over food prices as have countries like Haiti or Somalia.
Mexico's government has helped control tortilla prices by subsidizing some fuel and warehousing costs.
($1 = 10.632 pesos)