MexECON Blog

February CPI Rises 3.6 Percent YOY

Mexico's February consumer price index (CPI) was up 3.6% from the same month one year earlier, accelerating from the 3.3% gain in January but equal to the 3.6% rise in December.  According to the report, released Thursday by the official statistics agency INEGI, the acceleration in inflation during February came mostly from higher prices for fresh foods such as onions and tomatoes and energy products such as gasoline.  Excluding the volatile categories of fresh foods, energy, and government-set prices, the February "core" CPI was up just 3.0% year-over-year, after increases of 2.9% in each of the two prior months.

At the wholesale level, inflation also accelerated, but it remained lower than at the retail level.  The February producer price index excluding petroleum (PPI) was up 2.1% year-over-year, after rising 1.6% in the year to January and 1.5% in the year to December.  In February, wholesale inflation accelerated for both goods and services.

Comment:  In spite of the modest acceleration in February, inflation in Mexico remains under control.  With recent data suggesting the economy is slowing, inflation also seems unlikely to worsen very much in the immediate future.  That could give Banco de México greater freedom to cut interest rates, as policymakers have recently signaled they are considering.  The only thing in the February CPI that may make them pause is that price increases for core services have accelerated for the last two months.  The overall level of core services inflation is still modest, but Mexico's policymakers consider the category to be a key indicator of actual inflation pressures in the domestic economy.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1302

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