High inflation is not good. It is a hidden tax on citizens, it saps business confidence and it acts as a brake on investment. At the national level, a country that persistently runs higher inflation than another tends to end up with a weaker currency, higher interest rates, more volatility and a long-run loss of competitiveness and real incomes relative to the lower-inflation country.
For decades, that has been exactly the case of Mexico and the United States. Mexico has always had higher inflation and, partly as a result, a weaker currency and higher interest rates. In fact, part of the explanation for Mexico’s constant loss of real incomes is this consistently higher inflation.
But now, for the first time in many years (other than for a few months in the post-COVID pandemic period), Mexico actually has lower inflation than the United States. What could this mean for expats and foreign visitors to the country? What could it mean for businesses and investors? And what could it mean for Mexican citizens?
Find out in this week’s episode of Mexico News Daily’s “Confidently Wrong” podcast, as George and I discuss what this monumental economic milestone could mean for Mexico in the coming months and years. This episode will certainly help provide context and perspective on the topic. Enjoy!
Travis Bembenek is the CEO of Mexico News Daily and has been living, working or playing in Mexico for nearly 30 years.
