Fresh economic data is like fresh fruit to a sailor! We need it to stop the scurvy. As we suspected, inflation is taking its toll on retail sales in Mexico. The latest numbers show 0.2% retail sales against a forecast of 2.5% and that doesn’t bode well for the United States. The indicator tracks sales of food, textiles and clothing, medical supplies, office supplies, personal goods, household items, computer goods, furniture, cars and spare parts, as well as online retail sales.
Why should you care about Mexico? The answer to that question is simple, Mexico is one of the largest trading partners of the U.S. and if inflation in Mexico is taking a toll on retail sales then American companies exporting to Mexico will hurt too.
Year over year comparable data showed the same drop in retail sales. Retail sales same time last year came in at 8.6% vs 5.9% today.
The inflationary problem isn’t contained to Mexico though, as we wrote about in Global vs National inflation, almost all of the top U.S. trading partners are experiencing higher than normal inflation.
There is growing debate about whether the federal reserve will raise interest rates far sooner than anyone thinks it will to help contain global inflation. We will keep an eye on it and review our investment portfolio and take precautionary measures as needed such as buying protective puts on our equities or positioning cash to pounce on great value buys if and when a market correction occurs.