Mexico: Consumer confidence rebounds in February from massive drop
March 2, 2017
After hitting a record low in January, consumer confidence rebounded in February. The unadjusted index of consumer confidence produced by the statistical institute (INEGI) jumped from 68.5 in January to 75.7 in February. The rebound surprised analysts as they had expected the indicator to fall further to 66.0.
The sharp decline registered in January—which had reflected a combination of factors such as a spike in inflation on higher energy prices, the peso weakening to a historical low and risks related to the potential protectionist stance in the U.S.—was somewhat overdone and February’s result supported that view. The rebound was broad-based, with significant increases registered in consumers’ opinions regarding both their current situation and prospects. In February, households also showed less pessimism about the country’s current economic situation and future economic expectations, although the rise was somewhat timid.
Consumer sentiment is likely to stay low in the coming months as real wages are falling—at least in year-on-year terms—and are expected to continue doing so as inflation increases further. Political risks at home and abroad will also play a significant role in household sentiment.
Author: Ricardo Aceves, Senior Economist