Monday, March 4, 2024

Headline inflation increased in November, after 9 months of decline

After declining every month between February and October, Mexico’s headline inflation rate increased in November, official data showed.

However, the closely-watched core inflation rate, which excludes some volatile food and energy prices, continued to fall to reach its lowest level since October 2021.

Pemex gas station
Energy prices were slightly higher in November compared to the same month last year. (VICTORIA VALTIERRA/CUARTOSCURO.COM)

The national statistics agency INEGI reported Thursday that annual headline inflation was 4.32% in November, up slightly from 4.26% in October. The rate was 7.8% in November 2022.

Annual core inflation was 5.3% last month, down from 5.5% in October. That rate has now declined for 10 consecutive months.

Despite rising slightly, the headline rate was below the 4.4% consensus forecast of analysts surveyed by Citibanamex.

Month-over-month inflation was 0.64%, the highest level since January.

Bank of Mexico Governor Victoria Rodriguez Ceja
Victoria Rodríguez Ceja, head of the Bank of Mexico, which meets next week for the last monetary policy meeting of the year. (Presidencia)

The publication of the November inflation data comes a week before the Bank of Mexico (Banxico) holds its final monetary policy meeting of 2023.

The central bank’s board has maintained Banxico’s key interest rate at a record high of 11.25% since increasing it to that level in March. Its members are expected to once again vote in favor of the status quo next Thursday.

Inflation has now been above the bank’s 3% target for 33 months, but an initial cut to the record high interest rate is considered likely in early 2024.

Gabriela Siller, director of economic analysis at Mexican bank Banco Base, said on the X social media platform on Thursday that an annual headline rate of between 4.5% and 4.6% is expected at the end of the year.

“With this [forecast], it is expected that the Bank of Mexico will begin with interest rate cuts in the first quarter of 2024” and reduce its key rate by a total of 100 basis points during the course of next year, she wrote.

Annual inflation data in detail

INEGI data showed that goods in general were 5.33% more expensive in November than in the same month of 2022. Within that category, annual inflation was 6.78% for processed food, beverages and tobacco and 3.62% for non-food goods.

Inflation was 6.6% for school fees, 5.59% for fruit and vegetables, 5.28% for services, 3.74% for housing and 0.62% for meat.

Energy prices, including those for gasoline and electricity, were 0.24% higher than in November 2022.

What got more or less expensive in November?

Person buying eggs
Eggs went up 9.65% in price month-over-month. (GALO CAÑAS/CUARTOSCURO.COM)

INEGI also reported month-over-month increases and decreases for a range of individual products and services.

Price increases
  • Prices for green tomatoes rose 24.91% compared to October.
  • Electricity +22.26% (mainly due to the conclusion of discounted summer rates in various cities including Mexicali, Ciudad Juárez, Culiacán, Chihuahua and Hermosillo.)
  • Professional services +10.08%
  • Eggs +9.65%
  • Air travel +8.11%
  • Sugar +4.38%
  • Beans +3.52%
Price decreases
  • Prices for limes decreased 26.95% compared to October.
  • Avocados -6.36%
  • Onions -5.4%
  • Oranges -3.46%
  • Televisions -3.3%
  • Computers -3.23%
  • Tomatoes -2.09%

Which states had the highest and lowest inflation in November?

The common denominator of the states with the highest month-over-month inflation in November was that they were affected by the conclusion of discounted summer electricity rates.

Sonora had the highest rate at 4.25%, followed by Sinaloa (3.35%), Baja California Sur (2.88%), Baja California (2.73%) and Chihuahua (1.6%).

The states with the lowest month-over month inflation rates in November were:

  • Guerrero -0.81% (Parts of the southern state including Acapulco are still recovering from Hurricane Otis)
  • Coahuila -0.07%
  • Chiapas 0.16%
  • Campeche 0.16%
  • Morelos 0.19%

With reports from El Financiero and El Economista 

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