As a result, providers large and small have been reaping the benefits in Latin America’s second largest economy.
Alicia Doreintes Gerardo, who runs a fruit stand in downtown Mexico City, says sales volumes have improved “little by little” in the last three months, despite inflation doubling prices.
Fitch Ratings assured this Tuesday that consumption is one of the greatest strengths of the Mexican economy, despite several obstacles.
“Consumption has reached pre-pandemic levels, benefiting from easing of mobility restrictions, improving labor market and relatively strong remittances,” it said in a note affirming its ‘BBB-‘ rating on sovereign debt. from Mexico.
Consumption growth has translated into strong quarterly results for large supermarket chains like Walmart de México and La Comer, with year-over-year comparable revenue increases in the country of 9% and 7.3%, respectively, last month.
The services business is also experiencing an improvement in demand. Mexican restaurant operator Alsea, which runs franchises for international chains such as Domino’s and Starbucks, saw revenue growth of 49% year-over-year in the first quarter.
Alsea CFO Rafael Grosskelwing recently claimed in a call with analysts that the second quarter is off to a good start, with Easter week revenue up a fifth compared to the comparable pre-pandemic weekend of 2019.
Private consumption in Mexico grew 1.3% in seasonally adjusted terms in February compared to January, surpassing April’s monthly inflation rate of 0.54%, according to the latest figures released by Mexico’s INEGI statistics agency.
Adrian de la Garza, chief economist at Citibanamex, told Reuters last week that the consumer data came as a “surprise” and exceeded expectations.
Citibanamex now forecasts that local consumption will grow 2% during 2022, consistent with the monthly growth rate seen so far this year.
Retailers say the consumer push is being felt across the country.
“We are having a very, very good performance. Basically everyone in the country, we are seeing a recovery in the trend of our same-store sales,” the CFO of Mexican supermarket chain Soriana told analysts recently.
But not everyone is impressed by the consumption numbers, including Nikhil Sanghani, an analyst for Latin America at Capital Economics, who said “it’s not doing as bad as expected, but it’s not a spectacular recovery.”
“Consumption is not falling like in Colombia and Chile, but still (Mexico) never reached its strength in the first place,” Sanghani added.
Regional headwinds are also brewing. Rate hikes in the United States could reduce the flow of remittances to Mexico and tight restrictions in China could worsen supply chain disruptions to Mexico’s huge manufacturing base.
Still, unlike China, Mexico has been open for business as the pandemic subsides.
“We’re at our peak, the café is full of people who want to go out,” said Erik Belmonte, manager of a coffee shop in a posh area of Mexico City.
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