Inflation, which in recent months has skyrocketed to levels not seen in two decades, is being higher for households in the first decile, that is, those Mexican families with lower incomes, according to an analysis by the Mexican Institute for Competitiveness (imco).
In the study, where the rise in prices of the representative consumer basket of each decile was taken into account, and which varies among them due to their spending priorities, it was observed that inflation for the first decile –which earns around 3,313 pesos per month– was 8.7% per year in April, higher than the national average of 7.68% reported by the National Institute of Statistics and Geography (Inegi) in the same month.
Lower-income households allocate a greater proportion of their spending to the acquisition of goods whose prices have risen more during the last year, so the impact of inflation is stronger for their consumption baskets”, highlighted the Imco.
In contrast, the last decile, where the most economically advantaged families in Mexico earn 54,427 pesos per month, faced inflation of 7.5%, slightly lower than the national average.
Just last week, the government of Andrés Manuel López Obrador presented the Package Against Inflation and Famine (Pacic), which contains 16 measures to deal with high levels of inflation, whose duration will be six months.
different baskets
The IMCO highlighted that the consumption baskets vary according to the level of income, which is why it pays for the existence of a disparity with respect to inflation that each decile in Mexico must face.
“The effect of the increase in prices on the products on which households with lower incomes spend the most implies that the purchasing power of the lowest socioeconomic strata is also the one that contracts the most in a period with high inflationary pressures. This widens the already existing gaps between the socioeconomic extremes, which persist not only in terms of income, but also in other indicators”.
For example, the consumption basket of lower-income households is concentrated in basic consumer goods, such as food and beverages, which in April presented a price increase of 12.06 percent. This decile dedicates 7.2% of its expenditure to vegetables, legumes and seeds, a proportion that drops to 4.8% in decile V and to 2.2% in the last decile.
Something similar happened with spending on oils and fats, which increased 35.8% in April. The first decile spent 1%, while middle-income households 0.5% and the last decile 0.2 percent.
If the spending priorities of the highest income decile are observed, it dedicates more resources to paying for education services, car care and communications, where prices have increased to a lesser extent. For example, the prices of education have increased 4.56%, while transport 6.74 percent.
“The proportional expenditure on education items and services for decile I was only 2.4%, while decile V spent 3.8% and decile X, 9.8% of total spending. The annual increase in the prices of this item was only 3.2%”, indicated the Imco.