Given the partial fall in prices with greater volatility, particularly for fruits and vegetables, as well as in services related to tourism, general inflation in Mexico showed a slowdown for the first time in six months, reaching 4.99 percent annually in August, revealed the National Institute of Statistics and Geography (Inegi).
Based on data from the National Consumer Price Index (INPC), Inegi stated that general inflation increased by 0.01 percent in August compared to the previous month. With this result, annual general inflation rose from 5.57 – a maximum of 14 readings – to 4.99 percent annually.
Although it has been 42 months above the price stability target range of the Bank of Mexico (BdeM) of 3 percent, plus or minus one percentage point, the inflation rate in the country has slowed, reversing the upward trend of the previous five months.
Among the products that had the greatest impact on the general inflation showing a greater deceleration are chayote, with a monthly fall of 61.07 percent; green beans, serrano pepper, tomato, poblano pepper, air transport and tomato with a decrease of 20.78, 17.44, 16.82, 15.33, 14.76 and 10.07 percent, respectively.
Among the products with an upward trend are lemon, with an increase of 18.16 percent; pineapple, 14.20; grapes, 9.5, and eggs, 3.61 percent, mainly.
“A slowdown in inflation may be favoured by low economic growth, but limited or interrupted by the exchange rate depreciation and the latency of other important risks (…) after being pressured in the five previous readings, the interannual variation moderated in August. This was mainly due to the partial reversal in agricultural products, within the non-core index, specifically in fruits and vegetables, which still show double-digit increases,” said Alejandro Saldaña, chief economist at Ve por Más.
Underlying lowered
The core price index, which excludes energy and fresh food from its calculations and determines the medium- and long-term price trajectory, increased by 0.22 percent at a monthly rate and 4 percent at an annual rate, which was its lowest variation in 42 months (February 2021), due to a lower increase in goods and services.
The non-core price index, which includes energy and fresh food, registered a monthly drop of 0.70 percent and an annual increase of 8.03 percent.
On a monthly basis, merchandise prices rose by 0.18 percent and services prices by 0.27 percent.
“Although the drop in inflation is positive for the Bank of Mexico, underlying inflation has already been stuck in the vicinity of 4 percent for four consecutive fortnights. This indicates that it is running at a constant speed of 4 percent with no signs of slowing down.
The risk is that even considering that underlying prices move at the minimum monthly speed of 0.15 percent, for the rest of the year, underlying inflation will remain stagnant at 4 percent (…) The management of monetary easing requires greater attention.
said Alfredo Coutiño, director of Moody’s Analytics.
Producer prices also showed a correction. They moderated for the first time in seven months, going from 5.43 to 4.93 percent annually. This was in line with lower oil prices and the moderation of maritime freight rates.
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– 2024-09-10 16:02:06
