Worsening Poverty is Hurting Mexican Retailers Nacha Cattan - Bloomberg News
go to original July 29, 2015

Just as Mexico's consumer sector begins to emerge from the doldrums of the 2009 recession, a new government report suggests the recovery's foundation is on shaky ground.

An additional 2 million Mexicans have become poor since 2012, pushing one poverty gauge to a 14-year high, Mexico's social policy evaluation council said. The data show the challenges faced by President Enrique Pena Nieto to meet campaign promises to lift millions out of poverty and expand the middle class.

The report is also spurring questions about whether first-half consumer spending gains had more to do with government outlays for mid-term elections and a favorable comparison to 2014, when new sales taxes hit shoppers, and less to do with a sustainable recovery. Rallies at companies like Wal-Mart de Mexico SAB and Kimberly Clark de Mexico SAB may not have much fuel left in them.

Rising poverty "poses a risk for all retailers," said Giselle Mojica, an analyst at Monex Casa de Bolsa. "There could be an impact on formats that target low-income shoppers. With people's purchasing power falling, they wouldn't be able to shop there and they'd focus more on informal and roving markets. It's cheaper there and they can bargain."

...Coneval, the social policy evaluation council, conducts the poverty study every two years. Based on income alone, poverty climbed to 53 percent from 43 percent in 2006, the highest since 2000.

Read the rest at The Salt Lake Tribune

Related: Mexico: Growing Old in Poverty (Al Jazeera)

Photo: SupermarketNews.com

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