In the first half of September 2023, inflation in Mexico dipped, with a report by Inegi indicating a 0.25% rise in the consumer price index from the previous period.
This sets the yearly rate at 4.44%. Analysts had forecasted a rate close to this, at 4.48%. This marks the lowest rate since March 2021.
Interestingly, a year ago the rate stood at 8.76%. That’s double the current rate. Meanwhile, core inflation went up by 0.27% in the two-week period.
Annually, it sits at 5.78%. This figure is close to the predicted 5.75% and is the lowest since October 2021. Non-core prices increased 0.19% bi-weekly and 0.48% yearly.
The Bank of Mexico (Banxico) holds a high interest rate of 11.25%. They aim to keep this rate until inflation decreases stably.
Background
Firstly, this inflation drop shows Banxico’s policy is effective. High interest rates limit borrowing and help control inflation.
Secondly, lower inflation benefits consumers by boosting buying power. Yet, not all is rosy. Decreased inflation could hint at reduced economic activities.
However, this change meets analyst forecasts, suggesting a controlled descent.
Core inflation is a key metric. It offers a clear view of long-term trends, important for Banxico’s decisions.
Furthermore, the trend could lure foreign investors. Mexican assets might seem more attractive. A stronger peso could result from this, having its pros and cons.
Lastly, global economic conditions can’t be ignored. With inflation woes elsewhere, Mexico’s stability sends positive signals.
Overall, this data impacts Mexico’s economic climate significantly.