MexECON Blog

June CPI Rises 4.3 Percent YOY

Mexico's June consumer price index (CPI) was up 4.3% from the same month one year earlier, marking the second straight month of acceleration after year-over-year increases of 3.9% in May and 3.4% in April.  It was also Mexico's highest inflation rate since December 2010.  According to the report, from the official statistics agency INEGI, the acceleration in June came almost totally from rising prices for fresh foods.  Excluding fresh foods, energy, and administratively-determined prices, the June "core" CPI was up just 3.5% year-over-year, matching the core inflation rate in May.

In contrast to consumer inflation, Mexican wholesale inflation cooled in June.  The June producer price index (PPI) was up just 6.4% year-over-year, after a rise of 6.7% in the year to May.

Comment:  The jump in Mexican inflation during June would have been more alarming if it had not been driven by volatile food prices.  Prices for food can quickly change, and there is no assurance that they will necessarily translate into higher prices for other goods and services.  Moreover, the fall in global energy prices over the last two months will likely hold down general inflation in Mexico.  Most important, it still appears that slowing economic growth in Europe, Asia, and North America will probably help keep Mexican inflation in check during the coming months, in spite of the recent weakness in the peso.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1206

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