MEXICO CITY, Mexico - Mexico's biggest retailer, Wal-Mart de Mexico, on Tuesday reported a 12.75 percent fall in fourth-quarter profit after a sharp increase in costs hit its profit margin.

Mexican shoppers leaving Walmart in Mexico City

The company, which is controlled by U.S. retailer Wal-Mart Stores, reported a profit of 7.304 billion pesos ($558 million) for the September-December period, down from 8.371 billion pesos in the same period a year earlier.

Revenue for the quarter rose 3.6 percent to 124.5 billion pesos.

Walmex, as the company is known locally, reported a 60 basis point fall in its gross profit margin for the quarter to 22.2 percent. It said that operating expenditure rose 4.6 percent.

The firm has reported weak sales at stores open at least a year in recent months as Mexican consumer spending has slowed.

The country's consumer confidence index fell to a nearly four-year low in January after new taxes took effect and the country's peso currency tumbled amid a global rout in emerging market assets.

Mexico's biggest retail trade body said last month that sales at stores open at least a year will rise 1.7 percent in 2014 after a nearly flat 2013.