Due to inflation, the Mexican consumer perceives a recessionary environment since June

Although few economists project an economic contraction for Mexico in 2023, information collected by Nielsen IQ shows that the consumer is already experiencing an economic crisis or recession since June of this year.

Yanira Reyes, Customer Success Leader of Nielsen IQ in Mexico, pointed out that rising inflation has been the difference between the economic contraction that was experienced in 2020, during the declaration of the pandemic, and this year.

Interviewed by El Economista, the expert explains that since June, six out of 10 Mexicans considered that they are experiencing a crisis or recession.

And the perspective that something changes, in this sense, is long-term, beyond next year, he warned.

During 2020, in the midst of the pandemic, the moderate variation in the National Consumer Price Index (INPC) helped households weather the economic recession.

At that time, inflation registered an annual variation of 3.15%, supported by the drop in energy prices and the impact of the lower demand for services on prices.

Now the situation is reversed. The recession of families is caused by high inflation that is concentrating on basic necessities and low substitution possibilities, which are food, according to data from Nielsen IQ.

More currency to buy less

The data from the expert on consumer issues agrees with the information released weekly by the Bank of Mexico, which since May 13 reported that the increase in the demand for the monetary base, that is, banknotes and coins in circulation, already showed the impact of inflation.

At that time, the central bank reported that the monetary base in circulation, made up of bills, coins and bank deposits, was 2 trillion 473.811 million pesos.

From that moment and until the most recent report released by Banxico, which has a cutoff date of October 21, currency in circulation has grown by 1,773 million pesos. This means that in five months and 5 days, inflation accelerated the demand for bills and coins to leave a balance of 2 trillion, 475.584 million pesos, in circulation.

The power of the consumer

To get through this period of rising prices for basic consumer products, Profeco issued a series of recommendations to families.

One of them is to prepare a budget before making purchases, compare prices, substitute products, benefit from offers, take advantage of vouchers, bonuses and coupons and consume seasonal and local foods, which are usually more competitively priced.

The Nielsen expert agrees by stating that since last year consumers have begun to migrate to lesser-known brands that offer more affordable prices, as well as to white or free brands that maintain growth in purchases and have become promotion hunters.

ymorales@eleconomista.com.mx