MEXICO – Retail sales loses momentum

Retail sales was mildly affected by the tightening of social distancing measures in August

Joao Pedro Resende & Julio Ruiz


Retail sales grew 7.2% year over year in August (down from 9.9% in July) as the favorable base effect (social distancing measures last year) fades away. The number was below both our forecast of 6.6% and market expectations (as per Bloomberg). According to figures adjusted by working days, reported by the statistics institute (INEGI), retail sales expanded at the same pace, taking the quarterly annual rate to 11.2% in August (from 25.4% 2Q21). Meanwhile, private consumption key determinant, the real wage bill, stood at 5.1% year over year in the quarter ended in August (from 2.4% in 2Q21), with formal employment recovering to 3.9% (from 2.3%). In turn, consumption credit from commercial banks quarterly annual growth rate in real terms remains soft but recovering to -6.7% in August (from -10.2% in 2Q21). Finally, remittances converted to pesos grew at a still solid 15.9% in the quarter ended in August.

At the margin, retail sales lost momentum in the quarter ended in August. Using seasonally adjusted figures, retail sales registered a null growth in August, mildly affected by the retightening of social distancing measure amid the third COVID-19 wave. As a result, the quarter over quarter seasonally adjusted annualized rate (qoq/saar) stood at -4.0%. 

We expect private consumption to recover during the rest of the year as the economy reopens further. 

Julio Ruiz