Inflation rebounded in the first half of April

Mexico City. The increase in the prices of tomato, green tomato, serrano and poblano chili, as well as fruits such as orange, pineapple and papaya, explained much of the surprising rebound in annual general inflation in Mexico.

Annual general inflation in the country rebounded to 4.63 percent in the first half of April from 4.37 percent in the previous two weeks, due to the increase in the prices of fruits and vegetables, as well as the persistence in the prices of some services. , revealed the National Institute of Statistics and Geography (Inegi).

According to the report of the national consumer price index (INPC), the rebound in general annual inflation in the first 15 days of April is the highest in the last five fortnights and is far from the Bank’s price stability goal. of Mexico (BdeM) of between 3 and 4 percent, where it accumulates 75 fortnights (since the first of March 2021) outside said objective.

In the midst of the discussion about the direction of Mexican monetary policy, whether to lower or maintain the cost of credit, currently at 11 percent, in the next meetings of the Bank of Mexico, the variation of the INPC once again surprised the consensus of analysts who consulted Citibanamex, which predicted a general inflation of 4.5 percent annually.

In the first half of April, inflation rose 0.09 percent compared to the previous two weeks. Those surveyed by Citibanamex estimated that in the first half of April, the INPC decreased 0.06 percent fortnightly.

The surprises in the non-core index, which includes agricultural and energy products, remind us that the last mile to return to the Bank of Mexico’s 3 percent inflation objective will be very complicated, in particular we do not rule out that non-core inflation will continue giving surprises in the next fortnights (due to drought issues, for example)supports Intercam’s analysis area.

As happened at the start of 2024, the increase in agriculture surprised again. Fruits and vegetables caused general inflation to rise, as happened at the beginning of the year, with a biweekly variation of 3.38 percent in the first 15 days of April, to reach an annual inflation of 18.22 percent.

The tomato had an incidence with rising prices of 0.070 points, to report a biweekly variation of 12.14 percent; green tomato, with a participation in inflation of 0.036 units, for an increase of 22.97 percent compared to the last fortnight of March. The serrano chili presented a biweekly variation of 31.81 percent; orange, 8.83; avocado, 7.76; loncherías, inns, cake shops and taquerias, 0.39; own home, 0.15; low octane gasoline, 0.25, and domestic LP gas, 1.09 percent.

Meanwhile, electricity was one of the products with the least downward movement, with a biweekly incidence of minus 0.262 points, and a variation of a decline of 12.98 percent; The prices of onion, air transport, and sugar fell 9.92, 12.75 and 0.89 percent, respectively.

The underlying price index, which excludes energy and fresh food from its calculation, as well as determining the trajectory of prices in the medium and long terms, increased 0.16 percent at a biweekly rate and 4.39 percent at an annual rate.

The non-core price index registered a drop of 0.12 percent fortnightly and an increase of 5.38 percent at an annual rate.

Within the underlying index, at a biweekly rate, the prices of merchandise grew 0.24 percent and those of services, 0.07 percent.

In the non-core index, at a biweekly rate, the prices of agricultural products rose 1.68 percent and those of energy and tariffs authorized by the government fell 1.66 percent. This was mainly due to adjustments in electricity rates for the warm season in 17 cities in the country.

The rebound in inflation can be considered temporary. However, with this report, bets are growing that the Bank of Mexico will leave its funding rate unchanged at the monetary meeting on May 9CIBanco analysts said.