Mobile services and fixed service packages among the products that decreased their prices the most in 2022

IFT press release

This is an automated translation of the press release issued in Spanish

The prices of mobile services (telephony, internet and short messages) and fixed service packages (include internet, pay TV and home telephony), as of December 2022 had an annual drop of 7.82% and 8.34% each one, according to information from the National Institute of Statistics and Geography (INEGI). Said reduction contrasts with a 7.82% increase in the prices of the basket of 299 (generic) products considered to measure inflation.

Figure 1 clearly shows the contrast in recent years between general inflation (INPC) and the evolution of prices for mobile telephony services (including internet and short messages) and internet, telephony and TV packages, the which have drastically decreased. It is worth mentioning that for the first half of January 2023 this trend continues.

This represents a direct benefit over the 88.6 million Internet users in Mexico, which is equivalent to 75.6% of the population aged 6 years or over and whose uses of the Internet are concentrated mainly to communicate (93.8%), search for information (89.9 %), access to social networks (89.8%) and training or support for education (83.1%). The decrease in prices has a direct impact on the access and use of these services.

It is also noteworthy that generic mobile telephony and internet, telephony and pay TV packages functioned as an "anchor" to prevent inflation from being higher than observed , which is explained in the following table, which shows the ten generics whose price decreased and that had the greatest contribution to stop said increase, and that although they did not manage to reduce inflation, they did mitigate it. [one]

When ordering all the generics of the National Consumer Price Index (INPC) [2] from highest to lowest, according to their incidence on general inflation in 2022, it is observed that domestic LP gas, as well as mobile and package services They were the ones that contributed the most to the decline.

Of the 299 generics that make up the INPC and that are classified into 12 divisions, it stands out that only Communications (which includes generic mobile telephony and packages) presented an annual price reduction, with a decrease of 5.9 percent.

The decrease in communications prices meant savings that families were able to allocate to the consumption of other essential goods or services. This reduction is significant considering that in 2020 households in Mexico spent an average of $347 a month on mobile services and $465 on fixed services, which represents 1.9% and 2.23% of their income, respectively [3] . In this way, the proportion destined to communications, with the same services, could have decreased.

The foregoing reflects that the telecommunications sector in Mexico remains stable for the benefit of users of mobile and fixed services.

[1] Regarding the contribution of each generic to annual inflation in Mexico, INEGI uses the concept of "incidence" to represent the contribution of each component of the INPC to general inflation. Under this methodology, the sum of the incidences of all generics will be equal to national inflation. In this regard, it should be noted that an incidence can be positive or negative: a positive incidence contributes to the rise in inflation, while a negative incidence implies that general inflation is lower. In this way, the estimation of incidences makes it possible to know the magnitude and direction of the price changes of each generic on national inflation.

The incidence is calculated using the generic index in the study period (IPC P _t ), the generic index in the previous period (IPC P _t-1 ), the general or national INPC of the previous period (INPC _t-1 ) and the current weight of each generic in the INPC Basket ( w P). Incidence of the generic = ((IPC P _t - IPC P _t-1 )/INPC _t-1 )* w P. In certain cases, the sum of the components of a group of subindices may have some discrepancy due to rounding effects.

[2] To estimate the INPC, 299 generics grouped into 12 divisions are used according to the Classification of Individual Consumption by Purposes (CCIF). For further details, consult the Methodological Document of the National Consumer Price Index, published by INEGI, available at: https://www.inegi.org.mx/app/biblioteca/ficha.html?upc=702825104177

[3] Average monthly spending on fixed and mobile telecommunications services of households that have and spend on such services according to the 2020 National Household Income and Expenditure Survey.