Like Its Irresponsible Northern Neighbor, Mexico Is Also Suffering from Inflation

Along with the United States’ numbers, we also now have Mexico’s estimated Consumer Price Index inflation growth rate. For June 2022, Mexico experienced 7.99 percent price inflation year over year. This is the biggest number Mexico has seen since the volatile 1990s and the 2001 recession.

This also marks the twenty-fifth straight month with CPI inflation above the Banco de México’s 3 percent inflation target. Indeed, Mexican inflation hasn’t been below 3 percent since May 2020 (and then only barely, at 2.84 percent). Mexico’s CPI has been about double or greater than double the target rate since April 2021.

Source: Organization for Economic Co-operation and Development Main Economic Indicators database (Consumer Price Index: All Items for Mexico, OECD descriptor ID no. MEXCPIALLMINMEI), via FRED, accessed July 18, 2022.

During this period, unsurprisingly, wages in Mexico have not kept up with the estimated inflation. Manufacturing wages illustrate this. Though the FRED database has not updated Mexican wage numbers since April, we can see a steady decline in real manufacturing wages in Mexico from January 2021 to April 2022. In April 2022, Mexico saw an estimated 6.08 percent inflation rate and a 0.65 percent decline in manufacturing wages. Excluding the seeming outlier months of March and May 2021, Mexican manufacturing wages have not kept pace with inflation in the slightest. It doesn’t take a rocket scientist to notice that this is not a promising trend for the average Mexican, and it is certainly reason for lower- and middle-class people to be concerned. Like the United States, Mexico’s unemployment rate has been below 4 percent all year, but what good is employment if each month is met with falling real wages? A falling real wage is a falling standard of living—it’s growing impoverishment.

Source: Organization for Economic Co-operation and Development Main Economic Indicators database (Hourly Earnings: Manufacturing for Mexico, OECD desc