MexECON Blog

January Retail Sales Rise 0.9 Percent

Mexico's January retail sales rose by a seasonally-adjusted 0.9%, erasing much of their revised 2.1% decline in February.  Without seasonal adjustments, but stripping out the impact of price increases, January's sales were up 4.4% from the same month one year earlier.  The retail subsectors posting year-over-year increases in January included department stores; paper and personal products; metal and glass products; and motor vehicles, fuels, and lubricants.  The only subsector to show a year-over-year sales decline was clothing and footwear.  The report was released today by INEGI, the official statistics agency.

Comment:  Mexico's retail sales series can be volatile, but it is clear that the trend remains upward.  The prime reason for the uptrend is probably the gradually improving labor market.  In addition, news of the improving U.S. economy and a calmer outlook for Europe are probably helping encourage demand.  Finally, as I've argued recently, the fall in the value of the peso since last summer must have boosted the purchasing power of non-commercial financial flows such as remittances sent by Mexicans working in the United States to family members back home.  Nevertheless, the recent acceleration in inflation remains a key risk.  If prices for energy and food continue to rise rapidly, retail demand will likely start to soften in the coming months.

Patrick Fearon, CFA
Vice President, Fund Management

                                                Mexican Retail Sales
                                      Seasonally Adjusted, 2003 = 100
                                                     Source:  INEGI
Retail Sales 1201

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