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Inflation rate outstrips wage growth

With a rise of 6.63%, annual inflation rate exceeds wage growth; Mexico's first loss in eight years
Coins of MXN$10, MXN$5, and MXN$0.50 – Photo: Viviana Estrella/EL UNIVERSAL
11/12/2017
14:40
Rubén Migueles
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For the first time in eight years, contractual wage rates growth in Mexico have fallen behind the loss of purchasing power after annual inflation rate rises 6.63%, according to data gather until November 2017.

During the first 11 months of the year, average contractual wage negotiations reached a rate of 4.4%, benefiting 2 million 242 employees; however, once inflation was deducted, wages suffered a percentual loss of 1.54% which wasn't seen since 2009, when wage rates had an average decrease of 0.92% throughout the year, according to data from the Ministry of Labor and Social Welfare.

This phenomenon is, in part, the result of the depreciation of the Mexican peso against the American dollar, which has had an overall impact on prices, exceeding inflation rate expectations.

If inflation rate doesn't return to the target established by the Bank of Mexico next year, wages will decrease once more, according to Héctor Magaña, professorr and researcher at the Technological Institute of Monterrey, Campus State of Mexico.

Out of the 32 states of Mexico, only in eight did wage negotiations managed to overcome inflation: Sinaloa, Aguascalientes, San Luis Potosí, Colima, Chiapas, Tlaxcala, Sonora, and Guerrero.

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