Due to substantial increases in food and beverage commodities, and products such as fruits, vegetables and livestock products, inflation is affecting households with lower average incomes to a greater extent, revealed the Mexican Institute for Competitiveness A. C.
IMCO highlighted that annual inflation from June 2021 to June 2022 reached 7.99 percent, but in food and beverage goods it reached 11.85%; in fruits and vegetables 14.39% and in livestock products 5.51%.
These are the items in which Mexicans with a lower level of income distribute their resources, and therefore suffer a greater impact.
IMCO details that the rise in inflation in lower-income households, those with resources of around 3,300 pesos per month, saw an increase of 9.78% in the expenditure necessary to acquire the consumption basket.
The poorest households spend up to half of their income on food, beverages and tobacco.
Depending on the level of income, households distribute their resources differently: while a household representative of decile 1 (with the least resources) must allocate 50% of its expenditure to food, beverages and tobacco, the proportion that a household in decile 5 devotes to these goods is 43%, and in decile 10 it is only 28%.
EXPENDITURE ITEMS WITH THE HIGHEST INCREASE
Food products:
- Tubers (49,30%)
- Oils and greases (32,18%)
- Egg (23,96%)
- Fruit (20.52%)
- Grains (15,07%)
The upward trend in inflation and, in particular, the high rate in the food, beverages and tobacco component that has remained above 10% per annum since March 2022 and in June reached its highest level since December 1999, has resulted in increased pressure on the purchasing power of the lower socioeconomic strata, which contracts more in periods of high inflation.
Measures to be taken to stabilize prices and purchasing power
Strengthening economic competition, respecting the autonomy of Banco de México, providing targeted support to vulnerable populations, and boosting the supply of goods by attracting investment and the adoption of new technologies are essential in periods of both economic volatility and stability.
