Raul Macias, Mexico's first world bantamweight champion (1955), was born in Tepito. So was Kid Azteca, national welterweight champion for 16 years running. And Rodolfo Martinez, another boxing legend. In short, the ancient twin neighborhoods of Tepito and La Lagunilla, slums virtually since colonial times, produce prizefighters the way West Point produces generals.

But now even the boxers, the superstars of this impoverished world, are reeling under the blows dealt them by Mexico's stubborn economic phantom: inflation followed by devaluation followed by more inflation. And the smugglers, the cobblers and the mariachis for which the area is also known, are suffering just as much.

Last month the Mexican government bowed to the combined pressures of a massive $48 billion foreign debt, a glut in the world oil market followed by a drop in oil prices, a sudden and alarming capital flight conservatively estimated at $5 billion dollars and a 29 percent rate of inflation that was pricing Mexico's exports out of the international market.

On Feb. 18, the Bank of Mexico, after sustaining the peso artificially at around 28 pesos to the dollar since 1976, let it float on the open market. As the peso fell to an all-time low of 50 to the dollar, Mexican national pride, propped up so buoyantly in recent years by new oil wealth, took some hard lumps. Said outgoing president Jose Lopez Portillo ruefully: "I am a devalued president."

But for the people in La Lagunilla and Tepito, whose economic calculations have to do with how many times a week there will be meat on the table, pride is the least of it. Economist Sofia Mendez pinpointed the problem in a recent column: "The devaluation was not a measure foreseen, contemplated or even included as a remote possibility for this administration's six-year term. The proof is that there is no package of complementary measures to soften the foreseeable and avoidable negative effects of a devaluation."

Kid Azteca, now 69 years old, leans at the entrance to the network of courtyards and claustrophobic rooms of the tenement where he lives. His 1950s suit is neatly pressed, a threadbare handkerchief folded into the lapel pocket. He is trying not to look worried.

"Money used to be worth a lot," he smiles. "Now they say it's worth nothing, but you've still got to have it. The less you have the more it's worth."

At La Lagunilla's Miss Universo bridal shop, in the heart of the flea market, saleswoman Angela Diaz contemplates her display of gowns. The most expensive one is $285.

"We used to sell one or two dresses a day here," she says. "Now two days have gone by with no customers."

The drop in sales is threatening the job of Diaz, a single mother of three. The inflationary avalanche that followed the devaluation has diminished the buying power of her minimum-wage income of $5.68 a day at an exchange rate of 44 pesos to the dollar. Overnight, oranges soared to $1 a pound from their previous price of 10 cents. Asked about tomatoes, a staple of Mexico's spicy cooking, Diaz said she did not know the price: "I didn't go to the market today or yesterday. I'm sure everything's changed by now."

In the deepening economic crisis, observers of Mexico's political scene have looked for signs of turbulence among the poor and sparks of the revolutionary fire that Lopez Portillo has so adamantly championed in Central America.

As a salaried worker, Diaz has an advantage over Kid Azteca, who is anxiously watching his meager life's savings vanish, or over Juan Murcillo, 72, a self-employed shoe mender who sits every day at the entrance of a crumbling 17th century tenement waiting for customers.

The Labor Ministry and the private sector are now haggling over just how large an emergency wage increase workers will get. Angela Diaz has a steady income and will undoubtedly get some sort of raise.

Juan Murcillo will not. He said that while a few months ago he could earn about 250 pesos a day repairing shoes, there are days now when he does not make 100.

The complaint and lack of remedy seem universal: the mariachis in Plaza Garibaldi, down the block from Kid Azteca's home, wonder why the cheap peso has not brought the American tourists back. Romeo Ramos, an observer of La Lagunilla's social scene, one of Mexico's army of millions of under- or unemployed, notes that while the price of tacos has not soared, the portions have become "not large enough to fill a cavity with."

Jorge Montana, manufacturer of "the cheapest bedroom set in Mexico" waves about bills for glue, plywood and varnish from before and after the devaluation and announces a 20-to-40 percent increase in his wholesale prices.

Montana also plans to give his five workers, who get the 250-peso minimum wage for a 12-hour day, a 15 percent increase.

"I know it's not fair," he says. "Nothing's fair. We're all suffering. But who's going to protest? We Mexicans get used to anything. We always want to believe the future will be better."

Maintaining this hope has been crucial to the stability of the government's half-century rule. And for many years things did improve gradually but notably for Mexico's urban poor.

Health care, education and cheap public transport became increasingly available over the decades, in spite of the country's soaring population growth rate that reached 3.6 percent in 1976. Even Murcillo, the shoe mender, has access to health care through his son, who as a wage earner is eligible for social security.

But things are changing. After six years of economic boom, the squeeze is on. In Tepito, La Lagunilla and elsewhere, Mexicans donned yet another layer of cynicism to shield themselves from the financial chill.

"All that oil money, they said it was ours, no? But we never saw a penny of it, no? And now that the rich have spent it all, they say there never was any anyway, no? What difference does it make? It's always the same for us," said a Tepito resident eating watery soup at a cheap restaurant.

Whether the cynicism will turn to political belligerence remains to be seen.