Mexico’s Rising Pay-TV Prices Show Peso Fanning Inflation

  • TV Azteca and Televisa cite currency for higher prices
  • Rising living expenses prompts Banorte to recommend linkers

A surge in Mexico’s pay-TV prices is the latest sign that the peso’s swoon is exacerbating inflation.

Televisa SAB, the world’s largest Spanish-language broadcaster, and TV Azteca SAB are increasing the cost of some cable packages by at least 4 percent this month because of the weakening currency. The slump in the peso, the second-biggest among major currencies this year, has already helped to push inflation in tradable goods like clothes and fuel to a more than three-year high.

With the cost of living likely to jump by year-end, Banorte-Ixe’s Alejandro Padilla is recommending Mexico’s inflation-linked bonds.

“We expect to see inflation quicken in the last quarter of the year,” Padilla said. “We’re seeing more evidence of pass-through.”

He isn’t alone. Since June, Mexico’s linkers have been among the top 10 holdings in Bill Gross’s $1.5 billion Janus Global Unconstrained Bond Fund, according to the fund’s website.

Consumer prices rose more than analysts forecast in September, driving annual inflation up to 2.97 percent, the highest since April 2015, the statistics agency said Friday. After the report, Padilla’s Banorte raised his inflation forecast for year-end to 3.1 percent from 2.8 percent.

Win Thin, a strategist at Brown Brothers Harriman in New York, said after the report that he also saw inflation accelerating above the 3 percent target set by the central bank, known as Banxico, by year-end. "I think the peso remains a big factor in Banxico’s reaction function," he wrote in an e-mail. "And it seems to be feeding into rising price pressures."

TV Azteca’s Totalplay has sent notices to customers for a price increase that in some cases may reach 5 percent. The Mexico City-based company didn’t respond to requests for comment.

In an e-mailed statement, Televisa said it will raise prices for basic TV services offered by its provider Izzi by an average of 4 percent.

“Our business has been affected, because as in the entire industry, it has costs in dollars,” Televisa said.

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