Unstoppable Inflation: How It Hits Your Pocket and What to Do Now

The latest inflation report brings bad news: prices continue to rise, and your money goes further. At 4.42% annually, the blow is being felt at the supermarket, the gas station, and your home. We'll explain clearly what's happening and how you can protect your family's finances.

The National Institute of Statistics and Geography (INEGI) has put figures to a reality that millions of Mexicans feel every day in their pockets: the cost of living continues to rise. Annual general inflation stood at 4.42% in May, a significant increase that exceeds forecasts and raises alarm bells about the health of household finances.

This number isn't just an abstract statistic; it's a direct indicator of the loss of purchasing power. But where is this impact felt most? We analyze the data so you can understand how it affects you and what steps you can take.

Beyond the headline, the most worrying figure for economists is core inflation, which rose to 4.06%. This indicator excludes more volatile prices such as energy and some food prices, so an increase here suggests that inflationary pressures are more deeply rooted and widespread in the economy. Simply put: this is not a temporary blip.

| Category | Annual Inflation (Illustrative Example) | Impact on Your Pocket |

|—|—|—|

| Food, Beverages, and Tobacco | Over 6% | This is the most direct impact. The cost of basic food baskets increases, primarily affecting lower-income families. Fruits, vegetables, and meats are among the most affected. |

| Transportation | Nearly 5% | The price of gasoline, public transportation, and vehicle maintenance continues to rise. Getting to work or school is becoming more expensive. |

| Housing | Around 3.5% | Although more moderate, the cost of rent, domestic gas, and electricity continue their upward trend, putting pressure on the monthly household budget.

| Health and Personal Care | Over 5.5% | Medications, medical services, and personal hygiene products have seen significant increases, representing an unavoidable expense for families. |

| Restaurants and Hotels | Nearly 6.5% | Eating out or taking a vacation is an increasingly expensive luxury. This sector is directly affected by the increases in food and services. |

The situation is causing anxiety not only in households but also in the markets. The INEGI (National Institute of Statistics and Geography) reported that gross fixed investment fell during the first quarter of the year, a sign that business leaders are pessimistic about the near future.

This situation puts the Bank of Mexico in an extremely delicate position. On the one hand, high inflation would require a restrictive monetary policy (high interest rates) to cool the economy and control prices. However, Banxico recently opted to cut rates, a decision intended to avoid a recession but which could be adding fuel to the inflationary fire.

Given this situation, protecting your personal finances is crucial.

* Create a Detailed Budget: Identify precisely where your money is going. Cut non-essential expenses (small expenses) and prioritize savings, no matter how small.

* Compare Prices and Look for Deals: Take the time to compare prices at different supermarkets and stores. Take advantage of sales and consider buying store-brand products, which are often cheaper.

* Avoid Variable-Rate Debt: With the uncertainty surrounding Banxico's future decisions, taking on credit card or variable-rate loans is very risky. If you have debt, look to consolidate it into a lower, fixed rate.

Inflation is a complex economic challenge, but understanding its impact and taking proactive measures can make a big difference in the stability of your household.