Friday, December 1, 2023

Appliance prices to rise due to peso’s decline, NAFTA uncertainty

Two leading home appliance manufacturers have announced that prices of their products will increase due to the decline of the peso and continuing uncertainty about the future of the North American Free Trade Agreement (NAFTA).

On May 31 — the same day that the United States announced it would impose tariffs on Mexican steel and aluminum — the Mexican subsidiary of United-States-based multinational Whirlpool said its prices would rise across the board by 8% on July 1.

In a statement, the company said that “the exchange rate and the price of supplies” have both increased significantly in recent months, specifically citing higher costs for steel and petroleum products that it can no longer absorb.

Three days later, the Mexican company Mabe said its prices would go up by 9.5% on July 1, the same day that Mexicans will vote for a new president and Congress.

It also cited increased cost pressures stemming from a lower peso and higher prices for its key supplies.

The newspaper El Universal reported today that industry sources it consulted had indicated that other companies, such as Teka, would also soon follow suit.

Stoves, refrigerators, ovens, washers, driers and blenders are among the products that will soon become more expensive.

For both Whirlpool and Mabe, the July 1 price hike will be the second time they have raised prices in the space of a single year after 15% and 5-7% respective increases took effect in January. The higher prices will affect around 10 different brands that the two companies own between them.

Trilateral talks to renegotiate a new NAFTA deal have been drawn-out and contentious and the United States tariff announcement last month further complicated the process and placed additional pressure on the peso.

While uncertainty about the future of the trade deal remains, the Bank of México said the value of the peso against the US dollar is one of the variables that will suffer the most.

According to the currency conversion website operated by foreign exchange company XE, one US dollar currently buys just under 20.6 Mexican pesos.

Some analysts said last month that the peso could trade at up to 22 to the US dollar before the presidential election.

Source: El Universal (sp)

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