Inflación

Although the world-wide economic woes are dampening much of the holiday (and consumer) spirit back home, they’ve put me in a strange place….  For the farther the Dow Jones drops, the better the dollar-to-peso exchange rate (Yahoo! finance) becomes.  A rate that started at 10 pesos : 1 dollar, rose to 12.5, and is now pushing 14.  Each time there’s bad news back home, I take a look at the exchange rate and it gets… well… that much better.

Of course, the corresponding fear is that the more the peso drops, the more likely we are to see inflation here.  Though, I think Mexico’s export-oriented economy, which has already developed national substitutes for international products and has placed price controls on key price drivers like gasoline and corn, is not likely to see huge price increases on many products.  For what it’s worth, I did a little remembering and have the following price comparisons from two years ago (peso at 11:1), when I was also working here in Mexico City.  (Note, between the time I arrived in September (peso @ 10:1) and today (peso @ 13.7:1) there has not been a notable increase in prices.)

• tasty street quesadilla: was 6-10 pesos (2006), is 8-12 pesos (2008)
• 16 oz. bottle of diet coke: was 7.5-8 pesos (2006), is 8-9 pesos (2008)
• 750mL bottle of my favorite tequila: was 850 pesos (2006), is 1050 pesos (2008) (same store comparison)
• strawberry and crema paleta (popsicle) at a Michoacana: was 10 pesos (2006), is 12 pesos (2008)
• 3kg of laundry; washed, dried, folded, and with any necessary sewing repairs: was 48 pesos (2006), is 54 pesos (2008) (same lavanderia comparison)  Note: my impression is that the 48 was about average in 2006 and that 54 is relatively cheap in 2008.

Hmmmmmmm…. well, if the Dow falls any farther, I think I’m buying more tequila!

 

México, D.F.