The year-on-year monthly comparison also shows a deterioration in retail income, with a drop of 2.8% compared to the figure for June 2023.

New signs of consumer fatigue following the presidential elections on June 2. In that month, retail sales revenue in Mexico fell 0.5% compared to May, sealing a negative end to the semester for the indicator, which fell 0.1% in the first six months of the year.

This is shown by the data from the Monthly Survey of Commercial Enterprises (EMEC), reported on Tuesday morning by the National Institute of Geography and Statistics (INEGI).

Although the half-year decline was moderate, it is the first stumble in retail sales for the first half of the year since the pandemic-hit 2020, when there was a 10.6% contraction.

In terms of monthly comparisons, the 0.5% decline in June was the ninth setback for the indicator in the last 12 months and the second in a row, after the May figure was revised downwards to a slight contraction of 0.04% compared to the 0.1% growth originally estimated.

The year-on-year monthly comparison also shows a deterioration in retail income, with a drop of 2.8% compared to the figure for June 2023.

This reflects a consistent loss of dynamism in the commercial sector over the past year, coinciding with weaker employment growth, stagnation in consumer confidence and an alteration in the timing of the distribution of social programs during 2024.

June results

Specifically in June, the sales balance tipped in the negative direction, with monthly declines observed in 12 of the 22 categories and commercial channels monitored by Inegi through EMEC.

The declines and growth were heterogeneous between basic and discretionary consumption categories, with no marked deterioration or improvement observed in either of the two.

Online and catalogue sales were the most affected, with a 9.9% decline, followed by an 8.2% drop in the category of home furniture and other household goods.

Completing the top five declines were interior decoration items (-8.2%), pets, gifts, religious and disposable items (-5.7%) and jewellery (-4.4%).

On the other hand, improvements were observed - less significant - in the areas of clothing, jewelry and clothing accessories (+3%), groceries and food (+2.9%), stationery, books, magazines and newspapers (+2.8%), department stores (+2.3%) and cars and trucks (+1.2%).

Half-yearly count

During the first half of the year, declines were also recorded in 12 of 22 commercial categories, with losses predominating in discretionary, i.e. non-basic, consumption.

The highest declines were in the categories of used items (-15.6%), recreational items (-14.2%), footwear (-12.4%), perfumery and jewellery (-10.4%) and textile products, except clothing (-9.2%).

Meanwhile, the categories that registered improvements are led by interior decoration items (+12.7%), followed by cars and trucks (+9.4%), internet and catalogues (+9.3%), furniture, computer equipment and accessories and telephones (+5.7%) and groceries and food (+3.5%).

Headwinds

The trade sector has been hampered this year by a weaker employment momentum. This can be seen in the cumulative 40% drop in hiring in the formal sector of the economy through July, with only 307,402 new jobs, compared to 512,243 in the same period in 2023.

The rise in general inflation cannot be ignored either, which in June was 4.98% (the highest year-on-year figure since June 2023) with a marked emphasis on the non-core component, which reached 7.7%.

Meanwhile, while consumer confidence remains at high levels, it has stopped growing at the margin, with an index that exceeded the 47-point barrier in November 2023, but has since continued to fluctuate in a range of 47.1 and 47.4 units.

The social programs factor

On the other hand, in the first half of the year, the dates for the distribution of resources from federal social programs (pensions for senior citizens, for people with disabilities and for working mothers) were modified due to the electoral ban that occurred between March 1 and the federal elections of June 2.

Thus, in February, the payment of two two-month periods (March-April and May-June) was advanced, which could have impacted the temporal distribution of spending by consumers who benefit from these programs. These payments were reactivated at the beginning of this month of July.