Economics: Household spending outpaces income
Following up on our earlier issue on household incomes according to the 2018 National Household Income and Spending Survey (ENIGH for its Spanish acronym), this week we are focusing on the characteristics of household spending and how they have evolved since the prior survey in 2016. Generally speaking, spending in current pesos has been largely steady over the past decade, although in real terms there have been notable variations due to the signs of post-recession recovery observed in the last two surveys, with a real-term downtrend that bottomed in 2014.
But perhaps one noteworthy point is the extent to which many households may be burning through whatever savings they may have as a 1.9% real-term increase in spending contrasts with a 4.1% decrease in household income. Moreover, those in the lowest income decile spent 110% more than they took in, even though their expenditures were a real 1% less than two years earlier. Only households in the top income decile reduced their spending (-1%) compared to 2016, while all other households increased their expenditures between 1.2% and 3.3% on average.
The structure of spending remained stable in most cases, with the exceptions of transportation, which rose from 19.3% to 20%, probably in relation to higher gasoline prices, and education, which absorbed 12.1% of spending, down slightly from 12.4% in 2016.
Overall, both household income and expenditures have behaved in completely different ways in Mexico depending on the income decile in question and geographic location, a reflection of the enormous degree of inequality prevailing throughout the country.
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