Mexico's February consumer confidence index edged down by a
seasonally-adjusted 0.1%, after a 2.6% surge in January.
According to the report, from the official statistics agency INEGI,
the fall in February came mostly from a 19.9% decline in the
subindex on consumers' willingness to buy durable goods. That
subindex had jumped 12.0% in January and 12.9% in December.
Meanwhile, the subindex on consumers' view of the current situation
of the country as a whole fell 1.6%, and the subindex on consumers'
future expectations for their own family fell 0.9%. In
contrast, the subindex on consumers' view of the current situation
of their own family rose 1.3%, and the subindex on their future
expectations for the country as a whole rose 1.8%.
Comment: At first glance, the
big drop in the subindex on consumer willingness to buy durable
goods is disturbing. However, this subindex can be very
volatile, and its decline in February did not erase all of the
strong increases in the previous two months. More broadly,
the gradual improvement in Mexico's labor market has recently
boosted consumer optimism, and that dynamic looks set to
continue. All the same, today's report suggests accelerating
inflation may be starting to unsettle some consumers. A sharp
drought has increased some food costs, and international tensions
related to Iran's nuclear program have boosted global oil
prices. Just as important, producers have faced much higher
costs over the last year, and they have finally started to pass
those costs on to consumers. If prices continue to rise
rapidly, optimism could fall more substantially and consumption
could be ratcheted downward enough to significantly dent Mexico's
Patrick Fearon, CFA
Vice President, Fund Management
Mexican Consumer Confidence
Seasonally Adjusted, January 2003 = 100