Friday, June 14, 2024

Inflation continues uphill climb in first half of May

Annual headline inflation in Mexico increased to 4.78% in the first half of May, up from 4.67% in the second half of April, according to the national statistics agency INEGI.

The uptick follows increases in inflation in Mexico in both March and April.

The rise in annual inflation in the first half of the month occurred despite a 0.21% decline in consumer prices compared to the second half of April.

INEGI also reported Thursday that Mexico’s core inflation rate, which excludes volatile food and energy prices, was 4.31% in the first half of the month. That rate declined from 4.34% in the second half of April.

Both the headline rate and the core rate were in line with the consensus forecasts of analysts surveyed by Citibanamex. The former rate was slightly higher than a median forecast of 4.75% from analysts surveyed by Bloomberg.

The Bank of Mexico (Banxico) targets a 3% headline rate with tolerance of 1 percentage point in either direction. The central bank’s governing board will hold its next monetary policy meeting on June 27.

Victoria Rodríguez Ceja of the Bank of Mexico
Victoria Rodíguez Ceja, the governor of Banxico, was one of the members of the governing board who voted to lower the benchmark interest rate to 11% in March. (Cuartoscuro)

The consensus forecast of more than 30 banks, brokerages and research organizations recently surveyed by Citibanamex is that Banxico will cut its benchmark interest rate by 25 basis points to 10.75% next month, and that the key rate will be 10% at the end of the year.

However, Bloomberg reported Thursday that the higher-than-expected headline rate in the first two weeks of May likely fueled bets that “the hawkish central bank will be slow to lower its interest rate.”

Fruit and vegetable prices continue to fuel inflation in Mexico

INEGI data shows that fruit and vegetable prices increased 19.99% annually in the first half of May. That’s up from an 18.57% annual increase in April.

Agricultural products in general — fruit and vegetables, and meat — were 8.75% more expensive than a year earlier. A modest 0.22% annual increase in the cost of meat tempered inflation in that category.

The cost of services increased 5.23% annually in the first two weeks of May, processed food, beverages and tobacco were 4.61% more expensive and energy prices, including those for gasoline and electricity, rose 4.08%. Prices for non-food goods increased 2.29%.

With reports from El Financiero and El Economista 


Have something to say? Paid Subscribers get all access to make & read comments.
PCB board

Mexico looks to prioritize development of semiconductor industry

The country is further solidifying efforts to promote the semiconductor industry as part of the North American supply chain.
Peso and dollar bills

Peso plummets to nearly 19 to the US dollar, then makes slight recovery

Governor Victoria Rodríguez said Wednesday that while the Mexican economy is solid, the Bank of Mexico could take action in case of "extreme volatility."
Puebla Governor Sergio Salomon and Audi Mexico President Tarek Mashour shaking hands in front of a temporary wall with the Audi logo.

Audi to invest over US $1B to build EVs in Puebla

Audi says it will expand an existing Puebla factory in order to begin manufacturing the German automaker's electric vehicles in Mexico.