Mexican Private Consumption Falls for the First Time Since the Pandemic

Mexican household consumption dropped by 0.8% in December 2024 compared to the same month in 2023, breaking a 45-month streak of year-over-year growth.

This data was released by Mexico’s National Institute of Statistics and Geography (Inegi) on Wednesday through the Monthly Indicator of Private Consumption (IMCP). The decline marks the first contraction since March 2021, when the economy was still reeling from COVID-19-related restrictions.

Unlike the gradual recovery seen in early 2021, December’s numbers highlight a clear weakening trend that began in March 2024. That month saw the last significant year-over-year growth of 6.3%, signaling a shift in momentum.

The December figures also underperformed Inegi’s own forecasts. Its Timely Indicator of Private Consumption (IOCP), published on February 16, had predicted a modest year-over-year increase of 0.6%.

Instead, private consumption dropped by 1.1% on a monthly basis, far exceeding the projected decline of 0.2%. This monthly contraction was the steepest since January 2024 (-1.6%) and the worst December performance since 2012 (-2%).

Mexico’s Economic Outlook

In seasonally adjusted terms, the private consumption index stood at 109.7 points in December, its lowest level since May 2023 (108.9 points). This figure is also 7.2% below its historical peak of October 2023 (118.2 points), underscoring a significant loss of momentum.

The drop in consumption aligns with broader economic challenges. On February 21, Inegi reported that Mexico’s GDP shrank by 0.6% in the fourth quarter of 2024 compared to the previous quarter.

Annual GDP growth for 2024 reached just 1.2%, falling short of market expectations of 1.5%. It was also well below the robust expansion of 3.2% recorded in 2023.

Private consumption showed resilience earlier in the year, particularly during the first and third quarters, contributing to an annual growth rate of 2.8%. While this outpaced GDP growth, it represented a sharp slowdown from the 4.3% increase seen in 2023.

The December decline confirms mounting economic headwinds as Mexico enters an uncertain period for its domestic demand and overall economic performance.