In January 2014, changes in Mexico's IVA (value added tax) were implemented that increased rates in the country's Border States from 11% to 16%. While much regional opposition to this change has come from the Border States, there has been little evidence to-date of impacts on consumers. Crossborder Group analyzed recent historic monthly consumer price index data from INEGI (the Índice Nacional de Precios al Consumidor - INPC) through January 2014 -- and found some surprising results comparing data from major non-border and border cities. Notably, there does appear to be an unusual increase in Border State Cities' consumer price index in January 2014. It is unclear if this can be attributed entirely to the IVA increase - but additional future data will help to clarify this. Also, another unexpected finding: odd peaks for Border State Cities consumer prices each November, and dips each May -- peaks potentially related to Mexico's November Buen Fin, as well as dips potentially related to some combination of Mother's Day sales on both sides of the border and US sales events related to Memorial Day. Additional analysis is needed -- but Crossborder Group hopes this information may be useful for your Mexico and binational US-Mexico needs. Please feel free to contact us at Answers@CrossborderBusiness.com for questions or more information about our industry and market analysis services - or visit our website at www.CrossborderBusiness.com.

1. Crossborder Informa:
Notes on Mexico’s Consumer Price Index
February 25, 2014

During a recent request to assess possible impacts resulting from Mexico’s 2014 IVA
increases in border states, Crossborder Group analyzed Metropolitan-level Consumer
Price Index data (Índice Nacional de Precios al Consumidor - INPC) from INEGI.

Data from selected major cities (see list below) were divided into “Non Border” and
“Border” State cities – and monthly averages of the change in the INPC Index were
calculated.

Several initial observations can be made from this data:
o
o
5
First, January 2014 data (the only monthly data available to-date following
implementation of IVA increases in Mexico’s border States) does seem to show an
abnormally high increase in the INPC Index in Border State Cities (compared
both to historic averages and to Non Border State Cities). More data (February
2014, etc.) will be needed to assess if this is a temporary change.
Second, there are notable peaks and dips that occur in the INPC Index in
Border State Cities in November (peak) and May (dip) each year that do not
exist in Non Border State Cities. It could be that November peaks are partly
associated with the annual Buen Fin sales, and May dips are associated with some
combination of Mother’s Day sales in Mexico as well as possible competition with
Memorial Day sales in the US – but, again, additional analysis is needed.
Monthly Change in MX Consumer Price Index
Selected Non Border State v Border State Cities
(Dec2010 base = 100, source: Crossborder Group analysis of INEGI data)
4
3
2
1
-1
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
0
-2
-3
-4
-5
Av Monthly Price Index Chg - Non Border
Av Monthly Price Index Chg - Border
INEGI Source Data: “Precios e inflación > Índice nacional de precios al consumidor > Mensual > Índice > Por áreas metropolitanas y
principales ciudades” (http://www.inegi.org.mx/sistemas/bie)
Cities Included in this Analysis:

Non Border State Cities: Mexico City, Guadalajara, Puebla, San Luis Potosi, Aguascalientes, Leon, Queretaro

Border State Cities: Monterrey, Tijuana, Mexicali, Ciudad Juarez, Hermosillo, Matamoros
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