Inflation gives Mexicans a break and stands at 7.76%
General inflation in the Mexican economy grew 0.30% in the first fortnight of February and stood at 7.76% annually, the National Institute of Statistics and Geography (INEGI) reported Thursday.
“In the first fortnight of February 2023, the National Consumer Price Index rose 0.30% concerning the previous fortnight. With this result, annual headline inflation stood at 7.76%,” the report indicates.
In the same period of 2022, biweekly inflation was 0.42%, and annual inflation was 7.22%.
Consumer prices reached their highest levels in two decades in 2022, which prompted Mexico’s central bank to raise interest rates to historic highs.
UNDERLYING INDICATORS AND TRENDS
The “underlying” price index, which discards products that show volatility throughout the year’s seasons, “presented an increase of 0.35% at a biweekly rate and of 8.38% at an annual rate,” the report continues.
Within the underlying index, merchandise prices rose 0.40% biweekly, and services increased by 0.30% in their prices.
In the same period, the “non-core price index”, which includes the entire basket of products, “had a biweekly increase of 0.15%, and (an annual increase) of 5.93%”.
At a biweekly rate, within the non-core index, the prices of agricultural products fell 0.24%.
Finally, energy and government-authorized tariffs increased by 0.49% compared to the previous fortnight.
A report by Grupo Financiero Banco Base published on Thursday comments that “general inflation shows a gradual decrease because pressures on merchandise prices in the underlying component are moderating, and the prices of agricultural products, specifically fruits, and vegetables, fell”.
However, the private bank warns that three upside risks to headline inflation are still present due, in the first place, “to core merchandise inflation, which, although it has moderated, is still at high levels”.
The other two upside risks are “the services component, which continues to rise at an accelerated pace, and the decline in the non-core component due to fruit and vegetable prices, whose price is volatile,” depending on the agricultural seasons.
Because the inflation reported by the state agency is close to the downward trajectory expected for 2023, the projection of the analysts of the private financial group is that “inflation towards the end of the year remains unchanged at 5.10%”.
That level at the close of 2023 will be even higher than the target of monetary and financial authorities, which ranges from two to 4% per year.
To contain inflation, on February 9, the Board of Governors of the Bank of Mexico unanimously agreed to raise the interest rate to a historic high of 11% by raising this indicator by 0.50 percentage points.
This is the first time the interest rate has reached this level in Latin America’s second-largest economy since the Mexican monetary authority adopted this instrument as an operational target in 2008.
With information from Sputnik
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