Mexico: Consumer sentiment worsens in February
Consumer sentiment continued to deteriorate in February, with uncertainty regarding NAFTA talks and upcoming general elections outweighing solid labor dynamics and decelerating inflation. The seasonally-adjusted index of consumer confidence produced by the Statistical Institute (INEGI) eased to 85.0 in February from the revised 85.6 figure recorded in January (previously reported: 85.9). February’s figure was the weakest since April of last year.
The dip in the headline figure was mainly attributed to a decline in consumers’ appraisal of current economic conditions compared with a year ago. Similarly, despite rising real wages, Mexicans’ propensity to purchase big-ticket items declined markedly for a second consecutive month after reaching a nearly decade-high figure in December. Conversely, consumers’ assessment of both current and future household conditions improved marginally, while their views on future economic conditions recorded a robust increase over the previous month.
Subdued consumer sentiment readings remain at odds with actual consumer spending data, which has proven particularly resilient to political events, both domestically and abroad, and markedly high inflation. As political uncertainty dissipates and the peso turns less volatile, consumer sentiment should trend higher. Nonetheless, an aggressive U.S. stance in NAFTA renegotiation talks, the possibility of an election upset in the July general election and concerns over immigration policy north of the border will keep a lid on sentiment for the time being.