Economics: Private consumption strengthens but spending on durable goods and services remains weak
Growth in private consumption has accelerated in recent months but has yet to significantly improve on pre-pandemic levels. Household expenditure has not grown uniformly, and there are especially pronounced lags in the consumption of durable goods such as autos and electronic appliances, as well as in some services that account for a significant portion of jobs. While the accelerating trend toward a disproportionate rise in the purchases of goods of foreign origin reflects the combination of a relatively strong peso and a high inflation environment, the lack of substantial gains in spending on services and goods of domestic origin feeds a spiral in which those sectors fail to generate the employment and wages essential to a significant economic recovery.
In other economic news last week, the annual rate of consumer inflation climbed to a higher-than-expected 8.16% for the first two weeks of July. Prices for fruits, vegetables and meat soared at more than double the headline rate, taking a major toll on the purchasing power of lower income consumers.
We are also including in this report an alert on the July 20 call by the US to engage in trade dispute consultations over Mexico's energy policies. This position that was seconded by Canada and could well lead to the next and decisive phase of the dispute settlement process with the formation of a dispute panel.
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