MexECON Blog

August CPI Rises 3.4 Percent YOY

Mexico's August consumer price index (CPI) was up 3.4% from the same month one year earlier, slowing from a year-over-year increase of 3.5% in July.  However, the inflation rate is still higher than the readings of 3.3% in June and 3.2% in May.  According to the report, from the official statistics agency INEGI, much of the decline in inflation during August stemmed from retreating prices for fresh fruits and vegetables.  Excluding the volatile categories of fresh foods, energy, and administratively-determined prices, the August "core" CPI was up just 3.2% year-over-year.  Core inflation in Mexico has now been at 3.2% for three straight months.

Comment:  Because of the continuing growth in the Mexican economy and the late-summer decline in the strength of the peso, there are still some inflationary pressures in Mexico.  However, the current slowdown in the global economy has pushed commodity prices lower.  In addition, concern about slowing growth is probably holding down wage pressures.  In sum, it now appears that Mexican inflation will remain stable or continue to moderate in the near term.  That should allow Banco de México to keep interest rates at their current low levels in order to buttress the economy against the challenges facing the global economy.

Patrick Fearon, CFA
Vice President, Fund Management

                                                 Mexico's Consumer Price Index (CPI)
                                                      Percent Change, Year-Over-Year
                                                                      Source:  INEGI
CPI 1108

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