Mexico: Consumers turn more pessimistic in January
Sentiment among Mexican consumers deteriorated in January as uncertainty surrounding both NAFTA negotiations and upcoming domestic elections seemingly outweighed the effects of a tighter labor market and softer inflation. The seasonally-adjusted index of consumer confidence produced by the Statistical Institute (INEGI) eased to 85.9 in January from 88.6 in December, marking the lowest print since June of last year.
The dip in the headline figure reflected a deterioration in consumers’ assessments of both the country’s current and future economic situations. Their views on future personal economic situation was also more pessimistic in January from the previous month. Consumers were, however, slightly less downbeat regarding their current household situations, which partially reflected a strong labor market and weaker price dynamics. Nonetheless, consumers’ propensity to purchase big-ticket items eased from a nearly decade-high value of 90.6 in December to 88.8 in January.
Subdued consumer confidence is widely expected to persist in the near future as political events continue to dominate headlines and the peso remains vulnerable to swings in U.S. policymaking. Nevertheless, and despite a tight monetary stance, a solid labor market and a further deceleration in inflation could lift households’ real purchasing power and shore up consumer sentiment and spending later this year.