EconomyInflation and high interest rates complicate the recovery of...

Inflation and high interest rates complicate the recovery of consumption in Brazil, Mexico and Chile

High inflation rates and higher interest rate forecasts will temper the robust recovery in consumption after the coronavirus pandemic lockdowns in Brazil, Mexico and Chile, credit rating agency Moody’s said on Tuesday.

The strength of private consumption, which contributes almost two thirds of the GDP of the three countries, will depend largely on the solidity of consumer confidence in Brazil, the improvement in job creation in Chile and the situation of wages reais in Mexico, the firm said in a research note.

Mexico, the second Latin American economy, suffers from the high level of labor informality that affects the recovery of wages, in the context of an inflation that could have reached in the first half of August almost triple the permanent goal of the central bank, according to analysts consulted in a Reuters poll.

“Wages after inflation (in Mexico) will probably remain low, especially in informal work. In Brazil, workers are going back to work, and wages in formal work are increasing with inflation,” the agency said.

Moody’s highlighted that consumption recovered in the region as a result of the lifting of restrictions due to COVID-19, especially in Chile, where the Government authorized a series of incentive measures to encourage retail demand.

But now the South American nation faces the pessimism of consumers as a result of internal and external shocks, such as the social unrest of 2019, the impact of the war in Ukraine and the uncertainty derived from the process to draft and carry out a new Constitution, Moody’s said.

Meanwhile, Brazil and Mexico have seen an improvement in domestic consumption thanks to the reactivation of their service sectors, although tighter conditions for retail loans could alter the trend after their central banks applied strong increases in interest rates. interest.

With information from Reuters

Will El Buen Fin be able to stop inflation?

If it wants to be successful, the sales season of El Buen Fin 2022 must have very attractive offers and discounts to make Mexicans consume and beat inflation.

Get rid of inflation! Gentera achieves triple-digit profits

Despite the good dynamism of its portfolio, the institution will show caution in 2023 due to the "January slope" and the possible defaults of its clients.

Arca Continental enters the distribution of Don Julio tequila

The Coca-Cola bottler will now test distillate distribution, while reinforcing Topo Chico's presence in the ready-to-drink category.

Inflation in Mexico picks up 8.5% in the first half of October

The rise in prices more than doubles Banxico's goal and indicates that the entity will continue to make credit more expensive at its next monetary policy meeting.

Inflation does not spare even beer; has its biggest rise in 12 years

The chela registered an increase of 11.2% during September of this year, the highest variation in 151 months; the most expensive 355-milliliter bottle was found in Cuernavaca Morelos.