Monday, March 4, 2024

Mexico’s inflation rate in January is the highest since June last year

Mexico’s annual headline inflation rate rose for a third consecutive month in January to reach 4.88%, according to data published by the national statistics agency INEGI on Thursday.

The rate — slightly above the consensus forecast of analysts consulted by Citibanamex — is the highest since June, when inflation was 5.06%.

Person weighing bags of produce on a scale
Fruits and vegetables are 22% more expensive than in January 2023, with tomatoes and onions seeing some of the most dramatic price spikes. (Cuartoscuro)

Headline inflation declined for nine consecutive months between February and October last year, but rose in November to 4.32% and ticked up to 4.66% in December.

In better news, the closely-watched core inflation rate, which excludes volatile food and energy prices, fell for a 12th consecutive month in January to 4.76%, down from 5.09% in December.

The publication of the January inflation data comes ahead of the Bank of Mexico’s monetary policy meeting later on Thursday. The central bank’s board, which targets a headline rate of 3%, is widely expected to leave the bank’s benchmark interest rate at 11.25%.

Many analysts believe that an initial cut to the record high rate will come in March, exactly one year after it was raised to 11.25%.

Fruit and vegetable prices soar

INEGI data shows that a significant increase in the cost of fruit and vegetables was once again a major driver of the spike in headline inflation. Prices were up almost 22% in January compared to the same month of 2023, the highest year-over-year spike since August 2017.

The annual increase in the price of onions was a whopping 145%, while tomatoes were 63% more expensive.

Prices for the other component of the agricultural products category — meat — declined 0.19% in January compared to a year earlier.

Prices for processed food, beverages and tobacco rose 5.54% compared to January 2023, while services were 5.25% more expensive. Energy prices, including those for gasoline and electricity, increased 1.41% in annual terms.

With reports from El Financiero and El Economista 

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