Femsa has begun to raise its beer prices in Mexico by around 5%. The beverage group, full name Fomento Economico Mexicano, announced its first price hike in two years yesterday.

In a conference call with analysts, head of finance for the company's beer division, Gerardo Estrada, said: "The price increase started in February. We're in the process of rolling it out, and expect to finish this week or the next."

The announcement comes on the back of Femsa's main competitor, Grupo Modelo, raising its beer prices last month. Modelo upped its prices by around 4% in some regions of Mexico. It was the brewer's first domestic price increase in two years as well.

The price rises come at a time when the country's economic growth looks set for an upturn after a sluggish 24 months. Economists expect Mexico's gross domestic product to grow by more than 3% in 2004.

Femsa has not decided yet if it will raise its beer prices in the US. Modelo upped its US beer prices by 3% earlier this year.