Mexican consumer confidence index likely unchanged in September

Mexico’s consumer sentiment index had dropped in August to the lowest levels seen since February 2014, while the seasonally-adjusted index dropped more than 6 percent since January in 2016. The ‘expectations – business conditions’ sub-component was the key source of decline as it dropped to its worst level ever.

It is evident that the deterioration in the outlook of Mexican economy has already begun hurting consumer sentiment. This is in spite of inflation remaining lower than the central bank’s target and despite the fact that the labor market continues to indicate job growth and a drop in the jobless rate.

Given that inflation is expected to accelerate further, both confidence and consumer spending might come under rising pressure. Confidence index is expected to have stayed the same at 86.5 in September, according to Societe Generale. In all, the deterioration of sentiment seems increasingly in line with the growth outlook. The economy and consumer spending have possibly peaked and are expected to moderate in the future, added Societe Generale.