MexECON Blog

September CPI Rises 3.4 Percent YOY

Mexico's September consumer price index (CPI) was up 3.4% from the same month one year earlier.  That followed year-over-year increases of 3.5% in both August and July and 4.1% in June.  It was also far below the most recent peak inflation rate of 4.6% during the spring.  The decline in inflation during September mostly reflected cooler prices for fresh foods such as avocados, potatoes, melons, and chicken.  Excluding the volatile categories of fresh foods, energy, and government-set prices, the September "core" CPI was up 2.5% year-over-year, after an increase of 2.4% in the year to August.

At the wholesale level, inflation remained muted.  The September producer price index (PPI) was up just 1.0% year-over-year, in line with the increases of 0.9% in August and 1.0% in July.

Comment:  The easing in Mexico's inflation rate could not come at a better time.  Cooler inflation was a key reason why Banco de México was able to cut interest rates in September to help arrest a precipitous softening in economic growth, and the continued fall in inflation could now help encourage consumers to start buying more aggressively again.  The easing in food prices should be especially helpful on that front.  The Mexican economy still looks like it is at risk of slipping into recession, but if consumer demand strengthens, any recession is likely to be short and shallow.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1309

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