January costs are complicated, but less demanding than in previous years

Mexican households will suffer a complicated January slide, though less severe and more manageable than in previous years, in the face of milder inflation, experts say.

In January 2022, the country’s annual headline inflation was 7.07 percent; in the same month of 2023, 7.91 percent. For this year, analysts predict it will range between 4.35 and 4.50 percent, while the Bank of Mexico estimates an average annual rate of 4.3 percent in the first quarter of the year.

However, the population will have to face constant increases in the price of food and services, updated payment of taxes such as ownership or endorsement of property and vehicles, as well as the liquidation of some purchases that were paid for on credit over the Christmas and New Year holidays. .

The above in a relatively favorable environment with salary increases of up to 20 percent in the case of the minimum that came into effect yesterday; a steady flow of remittances and more government spending before the end of this six-year term and the next election.

“This year’s January slope will be difficult, but less difficult than other years because of two factors: the government will spend more money, which will make the economy move faster, and inflation is expected to continue to moderate,” he opined. Gabriela Sillerová, Chief Economist of Banco Base.

In this regard, Héctor Magaña, a professor at Tec de Monterrey, pointed out that although inflation represents more favorable levels that will help families overcome a less pronounced slope, the basic indicator, which includes food and non-food items, still represents a high level, alongside services.

In the first half of December (latest data available), core inflation stood at 5.19 percent, while food, beverages and tobacco rose 6.45 percent. Meanwhile, according to data from the National Statistical and Geographical Institute, the price of services rose by 5.40 percent.

Given this scenario, the specialist agreed that January costs will be complicated, because in addition, in the first month of the year, there is an increase in the incorporation of the inflation effect in many products and services, such as electricity, water, gas and others. benzine. The rates of special production and services tax (IEPS) on soft drinks, cigarettes and fuel are also adjusted, which will amount to 4.3 percent in 2024.

Even the Department of Finance has announced that neither magna and premium gasoline nor diesel will have tax incentives for the week of January 1-5, indicating that consumers will pay the full IEPS, which is up to 6.70 pesos per liter of fuel. .

For the professor, although remittances are important to overcome this trend, the appreciation of the peso that has occurred in recent weeks works against them, as families receive fewer pesos in exchange for their dollars, minimizing their purchasing power. In fact, there were 12 months of purchasing power losses through October 2023, according to Base.

In addition, Mexicans have to face some obligations, such as the property tax, which is also adjusted upwards based on inflation, and in many cases they have to liquidate credit purchases that were made during November (El Buen End) and December, the specialist added.

Recommendation

“January tends to be a complicated month, with many people spending more during the holidays and the proverbial ski slope getting longer. If you are in this situation, make a plan to heal your finances, identify non-essential expenses and turn them into savings,” said Juan Luis Ordaz, director of financial education at Citibanamex.

In this regard, the National Commission for the Protection and Defense of Users of Financial Services (Condusef) assures that the January slope can be overcome with adequate financial planning. To do this, he suggests knowing your situation exactly as the first step, which is possible by creating a detailed budget plan for income and expenses so you know your ability to pay.

The next step is to take control of your debts and organize them according to the time it would take you to get out of them. Finally, he recommends forgetting about compulsive purchases, which will require you to tighten your belt and be an intelligent consumer.

“Make only the necessary purchases and compare before spending” to save as much as possible and make sure that the costs do not cost you, urges the institution led by Óscar Rosado.

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