Mexican Consumers Anticipate Higher Inflation Pressures
According to the Consumer Confidence Index (CCI), prepared by Mexico’s National Institute of Statistics and Geography (Inegi), households foresee greater pressures on their spending over the next 12 months, particularly for food and essential goods.
A Seven-Month Declining Trend
The CCI, which assesses how consumers believe prices will behave in the country over the next 12 months compared to the same period last year, dropped by one point in July. This decline reflects consumers’ pessimistic outlook on price increases.
Inflation Shows Some Relief
Despite this pessimistic consumer perception, inflation has moderated its rapid increase. The National Consumer Price Index (INPC) reported a yearly rate of 3.55% in the first half of July, staying within the Banco de México’s (Banxico) target of 2-4%. However, certain sectors like food, beverages, and tobacco saw annual increases of 5.12%, while poultry and livestock products rose by 10.70%, indicating higher prices for essential goods.
Banxico’s Inflation Expectations and Challenges
Banxico anticipates its inflation target (3%) to converge by the third quarter of 2026, expecting this year to end at 3.7%. The central bank acknowledges several upside risks, including currency depreciation, disruptions from geopolitical conflicts or trade policies, persistent underlying inflation, cost pressures, and climate impacts.
Key Questions and Answers
- What does the Consumer Confidence Index measure? The CCI evaluates how consumers believe prices will behave in Mexico over the next 12 months compared to the same period last year.
- What sectors have experienced significant price increases? Food, beverages, tobacco, poultry, and livestock products have seen notable annual price increases.
- What is Banxico’s inflation target and expectation for convergence? Banxico aims for a 3% inflation rate, expecting it to converge by the third quarter of 2026 and end at 3.7% this year.
- What are the upside risks Banxico acknowledges? These include currency depreciation, disruptions from geopolitical conflicts or trade policies, persistent underlying inflation, cost pressures, and climate impacts.
