MexECON Blog

June CPI Rises 3.3 Percent YOY

Mexico's June consumer price index (CPI) was up 3.3% from the same month one year earlier, accelerating slightly from a rise of 3.2% in the year to May.  However, inflation was still below the 3.4% rate registered in April.  According to the report, from Banco de México, the rise in inflation during June came in large part as declining prices for fresh food were offset by rising prices for processed foods.  Excluding the volatile categories of fresh foods, energy, and administratively-determined prices, the June "core" CPI was up 3.2% year-over-year, after a gain of 3.1% in the year to May.  The report also showed that the June producer price index (PPI) was up 3.3% year-over-year, after a rise of 3.1% in the year to May.

Comment:  As predicted by this blog last month, much of the fall in inflation during May was due to one-off factors.  Price rises in Mexico could well accelerate a bit further in the coming months.  Nevertheless, the country's economic rebound is moderating, and that should help cap inflation rates.  If inflation remains under wraps, the central bank should be able to keep interest rates at their current low levels in the coming months in order to support the economic recovery and take some upward pressure off the peso.

Patrick Fearon, CFA
Vice President, Fund Management

                               Mexico's Consumer Price Index (CPI)
                                   Percent Change, Year-Over-Year
                                        Source:  Banco de México
CPI 1106

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