A Strong Peso Is A Challenge

As reported during the November Assembly, Mexican inflation last year was 8%, and wage inflation was even higher owing to a tight labor market (2.8% employment rate).  By instituting some efficiencies and other improvements, we held our 2023 Budget increase to only 5% ... and considered that a win!

Well, 2023 has some bad macroeconomic news for us:

1.  Inflation Increases.  Mexico's core inflation rate actually increased in January to 8.45%, unlike the US and  Canada's downward trends.

2. Exchange Rates Fall.  As if that wasn't bad enough, the exchange rate has plummeted to 18 Pesos to the Dollar -- about 10% worse than the 20:1 last year when we created the Budget.  Because virtually ALL our expenses are denominated in Pesos, this is like getting hit with a 10% surcharge on every expense.

The Dollar buys 10% fewer Pesos than in 2022

There are many reasons for the "weakening dollar, " and there's nothing we can really do about it.  If we spent everything according to our original plan, we'd be facing a meaningful deficit.  Rest assured, David and the Board are scrambling to avoid that outcome.  But it's not easy!