Mexico’s inflation drops to 5.06% in June, reaching lowest level since March 2021

Mexico’s annual inflation rate dropped to 5.06% in June, reaching its lowest level since March 2021, according to the National Institute of Statistics and Geography (Inegi).

This figure, below market expectations, indicates a fifth consecutive month of decline after May’s 5.84% rate and a reduction from January’s 7.91% rate at the start of the year.

However, Inegi reported a 0.10% increase in the month’s consumer price index (CPI).

In June 2022, the monthly inflation rate was 0.84% with an annual inflation rate of 7.99%, as highlighted by the statistics institute.

The underlying price index, which provides a more accurate measure of general inflation by excluding items with high price volatility, increased by 0.30% on a monthly basis and 6.89% annually, according to Inegi’s report.

Within the underlying goods and services subgroup, merchandise rose by 0.28% in the month and 8.26% year-on-year.

Services also saw growth, with a 0.33% increase on a monthly basis and 5.25% increase year-on-year.

In contrast, the non-core item experienced a 0.52% decline on a monthly basis and a 0.36% decline year-on-year.

Key highlights include agricultural prices, which fell by 0.24% compared to the previous period but rose by 2.89% compared to the same month last year.

Energy and government-authorized tariffs declined by 0.78% monthly and 3.08% annually.

The price index of the minimum consumption basket, consisting of 176 products and services, decreased by 0.08% monthly but increased by 4.95% annually.

Restaurants and hotels (10.34%), miscellaneous goods and services (9.07%), and food and non-alcoholic beverages (7.68%) were the items with the highest year-on-year increases.

While generic products that experienced the highest monthly increases included the Mexican tuber chayote (36.35%), oranges (9.74%), and avocados (7.78%).

Although the June figure remains above the Bank of Mexico’s annual target of 3%, which has led to the central bank maintaining the record interest rate at 11.25%.

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