Inflation, months of falling consumption and the scarcity of inputs threaten the “Good end”

Several people make purchases on the occasion of “Good End”, on November 11, 2021 in Mexico City (Mexico). EFE / Mario Guzmán

Inflation, months of falling consumption and the scarcity of inputs due to the disruption of value chains threaten the “Good End”, the Mexican Government’s commitment to incentivize purchases and reactivate the economy in the decisive fourth quarter of the year.

The discount program, which kicks off the Christmas and New Year’s Eve shopping season in Mexico, takes place from November 10 to 16, days after it was revealed that the headline inflation rate went up in October until 6.24% y-o-y, its highest level since the end of 2017.

It also comes after knowing the third consecutive fall of the monthly indicator of private consumption in the domestic market (Imcpmi), which fell 0.61% in August compared to July, as revealed on Monday by the National Institute of Statistics and Geography (Inegi).

In addition, the Inegi disclosed this Thursday the monthly decrease of 1.4% of the monthly indicator of industrial activity in September.

Global supply chain disruption, inflation and the fact that the pandemic is not over yet will mark the end of the year purchases in Mexico, warn experts consulted by Efe.

“We are going to have to coexist with this for quite a long time and, above all, we are going to suffer a lot this season of high December demand, when we will surely see that these prices are going to increase,” said economist Pablo López Sarabia, from the Tecnológico de Monterrey.


(Photo: Reuters)
(Photo: Reuters)

Despite the outlook, “the supply is guaranteed” for the “Good end”, Stated Manuel Cardona, Director of Relations with the Government of the National Association of Self-Service and Department Stores (Antad).

“Our associates tell us that their inventories are complete, naturally when we speak of ‘complete’ we refer to a natural and programmed consumption, but fortunately the reality always exceeds the ‘Good end'”, he commented.

The “Good end”, which refers to the expression that in Mexico is used to wish “good weekend”, has the goal of overcoming the spill of 239,000 million pesos (about USD 11.6 billion) reached in 2020, when the previous year’s sales doubled.

There are more than 131,000 registered companies for the event, according to the National Confederation of Chambers of Commerce, Services and Tourism (Concanaco-Servytur).

“We are certain, due to the behavior that consumption in the stores of our associates has had in recent months that the issue of inflation I do not think will affect, at least in the next 10 days,” said Cardona.


“Let’s make this the best ‘Good End’ of the recovery period and move on to the end of economic growth,” declared the Mexican Secretary of Economy, Tatiana Clouthier, during the start. (PHOTO: MOISÉS PABLO / CUARTOSCURO)

The “Good end” occurs after the quarterly contraction of 0.2% faced by the gross domestic product National (GDP) from July to September.

The Government trusts that this program will help to achieve the goal of growth of more than 6% of GDP by 2021 after the historic 8.2% crash of 2020.

“Let’s make this the best ‘Good End’ of the recovery period and spend at the end of economic growth “, declared during the start the Secretary of Economy of Mexico, Tatiana Clouthier.

However, economic indicators, in particular the inflationary increase of 8.59% According to Edmar Ariel Lezama, coordinator of the Unique Program of Specializations in Economics at the National Autonomous University of Mexico (UNAM), the national producer price index (INPP) obscures the objective.

“This figure may be an indicator that economic activity towards the end of the year may not have the figures that we had raised a few months ago,” he explained in an interview.

Even so, the “Good end” is “going to make up a bit of a bad figure” in the decisive third quarter of the year, said the professor from UNAM.

“It is normal for consumers to be a little more cautious towards the end of the year, knowing that next year there will be uncertainty around whether one will keep a formal job or the salary increase”Stated Lezama.

Given the fears of a shortage of goods and inputs, which have had a major impact on the automotive industry and manufacturing in Mexico, experts foresee problems of rising prices rather than shortages.

“We are going to have the reality that many industries are going to have the products, but more expensive. Although in others the product is going to be scarce because the supply chains were broken, ”said López Sarabia.


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