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🇲🇽❗️Cable FX Macro Weekly Note: Mexico July Retail Sales

**As seen in Risk In The Week report 09/15/23, subscribe at

Mexico retail sales surged to 2.3% M/m in June, this surprised economists’ estimates for 0.9% and posted the largest monthly increase since March 2022. The annual rate was lifted to 5.9% vs the estimate of 3.0%. The June report took the 3-month average up to 1.1% from a prior 0.0%, the metric had been at -0.4% in March of this year, the lowest level since June 2021. Looking ahead, consumer strength will be closely watched, as Banxico has said that there is still a way to go back to the price target. Some desks have been calling for rate reductions as soon as December, however, we think this call might be too aggressive and would compromise the Fed rate spread. Analysts at BBVA recently published the results of their ICBD BBVA indicator, a proprietary big data gauge to measure consumerism in Mexico. They said the metric fell 0.3% M/m in August, however, it was noted that it remains above May levels and +7.1% above December 2022 readings. BBVA added that they expect household spending in Mexico to remain resilient as real incomes have risen 6.2% Y/y and real wages have increased 10.6% Y/y as of June. The docket holds Mexico’s IGAE economic activity for July and will be released one day after the retail sales print, the desk at Scotiabank sees a deceleration on the month, however, they commented that there are no reasons for Banxico to alarm and signal a cut.



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