Mexico: Consumer confidence eases in June
July 5, 2017
Sentiment among Mexican consumers edged down in June, putting an end to four months of consecutive gains in the index which in turn had followed January’s record low. The seasonally-adjusted index of consumer confidence produced by the Statistical Institute (INEGI) eased from 85.1 in May—a five-month high—to 84.4 in June.
The June report showed declines across the board. The deterioration in consumers’ assessment of the current and future economic situation can be largely attributed to the effects of sky-high inflation, which is eroding Mexicans’ purchasing power and is expected to weigh on private consumption growth this year. Inflation concerns likely played a part in Mexicans’ propensity to purchase big-ticket items, which also dropped considerably in June. Households’ perceptions of their current and future economic situations, however, saw little and no change, respectively, through June.
Although households seem to have started feeling the pinch of rising inflation and tightening financial conditions, the outlook remains much brighter than had been expected at the outset of the year. Robust remittance inflows and a healthy labor market are shoring up purchasing power to an extent, while the Central Bank’s front-loading of interest rate hikes seems to have successfully anchored inflation expectations, which are likely to start easing by the end of the year and throughout 2018.
Author: David Ampudia, Economist