P&G Results Show 1% Growth as Tariffs and Inflation Weigh

This week in retail news: P&G reported modest sales growth of 1% in 2Q26, but warned of ongoing headwinds from trade tariffs and the US government shutdown, which are beginning to weigh on unit volumes. In Mexico, annual inflation accelerated to 3.77% in early January, driven by tax adjustments and new tariffs on non-treaty imports, complicating the recovery of the textile industry, which is currently operating at just 20% to 30% of capacity. To help offset these pressures, the State of Mexico and Banca Afirme launched a major initiative to provide MX$1.5 billion in financing to 10,000 small businesses over the course of the year.

More news below:

P&G Reports 1% 2Q26 Sales Growth, Flags Tariff Headwinds

Procter & Gamble (P&G) reported fiscal 2Q26 net sales of US$22.2 billion, up 1% year over year but slightly below analyst expectations of US$22.28 billion. While adjusted earnings exceeded forecasts, the consumer goods bellwether faced a challenging environment in its core market amid a US government shutdown and persistent trade tariffs.

Core earnings per share (EPS) were flat at US$1.88, beating the US$1.86 consensus. GAAP diluted net EPS, however, fell 5% to US$1.78, largely due to incremental restructuring charges. Organic sales, which exclude foreign exchange and acquisition impacts, were unchanged, as 1% pricing gains were offset by a 1% decline in unit volumes.

State of Mexico, Afirme Target 10,000 MSME Loans in 2026

The State of Mexico government has launched an expanded financing initiative for MSMEs through a partnership with Banca Afirme. Alejandro Razo Delgado, director of the Instituto Mexiquense del Emprendedor (IME), said the program aims to deliver 10,000 loans totaling MX$1.5 billion (US$87 million) in 2026.

The partnership expands available financing sevenfold compared with previous cycles. Under the agreement, the state government provides guarantees while the financial institution supplies the capital. 

Mexico’s Inflation Hits 3.77% Amid IEPS and Tariff Hikes

Mexico’s annual inflation rate accelerated to 3.77% during the first half of January 2026, surpassing levels recorded in the same period last year. Data from the National Statistics and Geography Institute (INEGI) show the increase was primarily driven by the scheduled adjustment to the Special Tax on Production and Services (IEPS) and new trade tariffs on goods from non-treaty countries, affecting consumer staples and industrial inputs.

Headline inflation concluded 2025 at 3.69%, exceeding market forecasts and marking its lowest level since 2020. This deceleration from the 4.21% recorded in 2024 was largely due to a sharp drop in non-core inflation, particularly in the agricultural sector. Economists attribute this relief to a recovery in crop yields following reduced drought conditions, which allowed fruit and vegetable prices to fall 5.62% over the year.

Mexico’s Textile Industry Eyes Recovery Amid Low Capacity

The Mexican textile industry is seeking to recover from low production levels by prioritizing higher value-added goods and diversifying its supply chains. During the 84th edition of Intermoda, Mexico’s leading fashion trade event, industry leaders said the sector’s survival depends on differentiation rather than competing on price with low-cost Asian manufacturers.

The industry is currently facing significant underutilization of manufacturing capacity. Jorge Castellanos, President, Intermoda, said plants in traditional textile hubs such as Puebla, Tlaxcala, and Jalisco are operating at just 20% to 30% of their potential. He attributed the decline largely to the influx of low-priced fabrics from China and Vietnam, which has distorted the domestic market and forced local designers and garment manufacturers to rely heavily on imported raw materials.