The basic cost of living in Mexico is lower than the U.S., Canada and Europe, especially for products such as fruits, vegetables, meat, poultry, fish, bakery products, groceries and other miscellaneous items.
The local and national pubic transport is generally lower in cost than the US. It has introduced competition into the market for national airlines and low cost airlines are starting to make a significant difference in air fares for domestic travel in Mexico, which until now have been relatively expensive.
Public utilities are more expensive in Mexico. The electricity prices are high compared to the U.S. mainly due to the lack of competition. Telephone services, both landlines and cell phones, are priced higher than the U.S. and Europe; Telmex, the national telecommunications incumbent, dominates the market, despite its public relations work that tries to play down this fact. The advent of Internet telephony (eg Skype, Vonage) is beginning to make long distance communications, especially affordable.
Tap water is relatively cheap, but not always potable (drinking). Decades of low investment, combined with a general attitude of impertinence toward the payment of water bills has left the network in Mexico water system in poor condition. As a result, most people buy bottled water, often in containers of 20 liters. Bottled water costs hundreds if not thousands of percent more per liter compared to the price of tap water in the U.S.
A widening range of products, especially some types of clothing, electronics, audiovisual equipment, technology (eg iPods, WiFi), computers, software and cameras are more expensive than identical products sold in the U.S.. Cars cost a bit more in Mexico than equivalent models in the U.S..
Gasoline and diesel is subsidized by the Mexican government and therefore not fluctate prices as much as those in the U.S. and Europe when oil prices rise or fall in international markets. However, it is unclear how long Mexico will be able to afford to subsidize the price of fuel.
Rents in Mexico may be higher than equivalent-sized cities in U.S. cities or if the place is very popular or fashionable, especially in places bordering the United States. In less popular towns and cities, you can find good quality accommodation at unusually affordable prices.
