Saturday, July 13, 2024

Consumer confidence levels in June highest level in over a year

Consumer confidence increased to its highest level in more than 1 1/2 years in June, official data shows.

The national statistics agency INEGI reported Wednesday that the consumer confidence index (ICC) rose 0.6 points from May to 45.2.

Mexican pesos in an ATM
INEGI reported Wednesday that the consumer confidence index (ICC) rose 0.6 points from May to 45.2, as the Mexican economy continues to have a strong 2023. (Shutterstock)

The month-over-month increase was the highest in five months, while the ICC reached its highest level since November 2021. The annual ICC increase was 2.6 points.

The month-over-month and annual ICC increase coincided with a decline in annual inflation to a 27-month low of 5.18% in the first half of June.

Inegi, in conjunction with the Bank of Mexico, conducted its consumer confidence national survey at 2,336 homes in cities across all 32 federal entities during the first 20 days of June.

It asked respondents about:

  • Their current economic situation compared to a year earlier.
  • Their expected economic situation over the next 12 months.
  • Their opinion about Mexico’s current economic situation compared to 12 months earlier.
  • Their opinion about Mexico’s expected economic situation over the next 12 months.
  • Their current capacity to purchase furniture, a television, a washing machine and other home appliances compared to their capacity 12 months earlier.
Responses to the INEGI survey were generally more optimistic than in 2022. (Daniel Augusto/Cuartoscuro)

Their responses — derived from the options of much better, better, the same, worse and much worse with regard to the first four questions, and greater, the same or lesser with respect to the fifth — were weighted and used to formulate the ICC score.

The biggest driver of the month-over-month increase in consumer confidence was an improvement of 1.5 points in the sub-index that measures perceptions about the national economy compared to a year earlier.

Two of the other four sub-indexes also rose compared to May: that which assesses the current capacity of respondents to purchase a home appliance increased by 1 point, and that which measures respondents’ current economic situation jumped 0.5 points.

The sub-index that measures perceptions on Mexico’s expected economic situation during the next 12 months remained unchanged, while that which gauges respondents’ expected economic situation during the same period declined 0.2 points.

Exchange rate
The peso has continued a trend of appreciation against the US dollar, reaching a new 8-year high this week. (Mario Jasso/ Cuartoscuro.com)

The only sub-index that declined is paradoxically the only one with a score above 50 — a level which indicates optimism among consumers.

The score for the home appliance sub-index — 28.4 — is well below the other four.

INEGI on Wednesday also reported private consumption data for the month of April.

The Monthly Index on Private Consumption in the Domestic Market increased 0.5% from March and 3.5% annually.

Consumption of Mexican-made goods and domestic services increased 0.3% from March, while consumption of imported products rose by a much high 2.8%. The annual increases were 2.6% and 12.4% respectively.

The bank Banco Base noted in a report that the strength of the peso – the US dollar dipped below 17 pesos on Wednesday morning – has boosted consumption of imported goods due to the greater purchasing power of the Mexican currency.

With reports from El Financiero and El Economista 

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