Onions were among products whose prices were down in September.Inflation reached a three-year low of 3% in September, a figure exactly in line with the central bank’s target.
The national statistics agency Inegi reported on Wednesday that consumer prices rose 0.26% in September to bring the annual inflation rate to 3%, the lowest rate since September 2016.
The rate is within the Bank of México’s target range of 3% give or take a percentage point for the fourth consecutive month. The annual rate recorded last month is in line with the forecasts of analysts consulted by the news agency Bloomberg.
The downward trajectory of the annual inflation rate to convergence with the Bank of México target was in large part due to the behavior of the non-core inflation index, which monitors products whose prices are most susceptible to fluctuations.
The non-core index recorded a 0.7% increase in the 12 months to September, the lowest variation on record. A 3.1% annual decline in energy prices was a key factor in keeping the index down.
The core index, which strips out products whose prices are highly volatile, recorded an annual increase of 3.8% in September, a figure that hasn’t changed in the past five months.
Helping keep month-over-month inflation low were reductions in prices between August and September for professional services, onions, avocados, bananas and air travel. However, prices for tomatoes, pre-school and primary school education, eggs and cars all went up.
The three-year inflation low increases the likelihood that the Bank of México will further reduce interest rates this year. The bank made quarter-point cuts in both August and September, citing low inflation and weak economic growth.
“. . . We think that the key rate will be cut by 25 basis points in both November and in December, taking it to 7.25% by the end of the year,” John Ashbourne, senior emerging markets analyst at Capital Economics in London, said in a note to clients.
Source: El Financiero (sp)
