MexECON Blog

May CPI Rises 3.9 Percent YOY

Mexico's May consumer price index (CPI) was up 3.9% from the same month one year earlier, accelerating sharply from a rise of 3.4% in the year to April.  Nevertheless, inflation remained slightly lower than its recent peak at the beginning of the year.  According to the report, from the official statistics agency INEGI, the acceleration in April stemmed mostly from a surge in prices for fresh foods such as tomatoes and chiles.  Excluding fresh foods, energy, and administratively-determined prices, the May "core" CPI was up just 3.5% year-over-year, after a rise of 3.4% in the previous month.

Inflation at the wholesale level also jumped in May, and it remained much higher than consumer inflation.  The May producer price index (PPI) was up 6.8% year-over-year, after a rise of 5.7% in the year to April.

Comment:  In spite of the jump in inflation during May, the outlook for price stability in Mexico is now much more benign than it was in late 2011.  Weather conditions and international security events still have the potential to cause volatility in non-core categories, and the recent plunge in the value of the peso will likely put some upward pressure on prices.  However, weakening demand in Europe and Asia seems likely weigh on Mexican economic growth and prevent inflation from getting out of hand. 

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1205

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