Robust Mexican Consumer Emerges as a Bright Spot in Weak Economy Isabel Woodford - Reuters
go to original May 20, 2022

Mexicans chafe over struggling economy and surging inflation (Reuters)

Not all is rosy for Mexico's economy as it deals with a two-decade annual inflation high and sluggish economic growth, but consumption levels have now reached pre-pandemic levels in Latin America's second-largest economy.

Spending has increased as Mexicans living abroad sent a record $12.5 billion in remittances home during the first quarter, tourism picked up, pandemic-restrictions and infections eased, while the job market remained strong.

As a result, vendors big and small have been reaping the benefits.

Alicia Doreintes Gerardo, who manages a fruit stand in downtown Mexico City, says sale volumes have improved "little by little" over the last three months, despite inflation doubling fruit prices.

Fitch Ratings on Tuesday flagged consumption as one of the Mexican economy's biggest strengths, despite various headwinds.

"Consumption has reached pre-pandemic levels, benefiting from easing mobility restrictions, labor market improvement and relatively strong remittances," Fitch said in a note affirming its 'BBB-' rating for Mexico's sovereign debt.

Growing consumption has translated into strong quarterly results at large supermarket chains like Walmart de Mexico and smaller counterpart La Comer, which posted annual same-store revenue increases in Mexico of 9% and 7.3% respectively last month.

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