Headline inflation in Mexico slows more than expected

The general inflation in Mexico moderated in the first half of November for the fifth consecutive fortnight, although it continued to be well above the official target, leaving the door open to further interest rate hikes by the Bank of Mexico.

The price index was located at a 8.14% at the interannual rate, below the 8.28% registered in the second fortnight of october. With this, inflation thus threaded five consecutive fortnights of decline, moving away from the record in more than two decades of a 8.77% which lasted until the second half of August, according to figures from the National Institute of Statistics and Geography (INEGI).

The figure was also lower than market estimates, which anticipated a rate of one 8.24%, according to a Reuters poll.

On the other hand, core inflation, considered a better parameter to measure the trajectory of prices because it eliminates products with high volatility, advanced to 8.66% at an annual rate, a level not seen since the second half of August 2000.

Within this, the prices of merchandise rose 0.35% in the last fortnight and those of services, 0.34%. The category of food, beverages and tobacco grew 0.35%.

In the same period, the non-core price index rose 1.19% at biweekly rate and 6.62%, annual. Within this, the prices of agricultural products decreased 0.37% and those of energy and tariffs authorized by the government increased 2.53%.

The above, to a greater extent, due to the conclusion of the subsidy to the summer electricity rate program that was applied in 11 cities of the country, detailed the INEGI.

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The products that reported the greatest increase were electricity, with a variation of 20.29%, serrano peppers, with 26.11%, and nopales, with 11.39%. In contrast, those that registered the greatest decrease were onions, whose monthly variation decreased by 13.02%, followed by green tomatoes, with -9.26%, and zucchini, with -7.93%.

Lastly, the Minimum Consumption Basket Price Index (IPCCM)3 increased 0.68% fortnightly and 8.84% at an annual rate. In the same period of 2021, the corresponding figures were 0.76 and 7.94%, in that order.

Banxicowhich has a permanent inflation target of 3% +/- one percentage point, has raised the benchmark rate by a total of 600 basis points as part of a cycle of increases that began in June 2021, up to its current level of 10%.

Its last monetary policy decision this year is scheduled for December 15 and the market anticipates a new increase in the cost of credit, this time from 50 basis pointsaccording to the most recent survey of the financial group

(With information from Reuters)


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