MexECON Blog

April CPI Rises 4.6 Percent YOY

Mexico's April consumer price index (CPI) was up 4.6% from the same month one year earlier, after increases of 4.3% in March and 3.6% in February.  The inflation rate in April was the highest since last October.  The acceleration in April came mostly from higher prices for agricultural products such as tomatoes, eggs, and chicken.  Excluding the volatile categories of fresh foods, energy, and government-set prices, the April "core" CPI was up just 2.9% year-over-year, versus increases of 3.0% in each of the previous two months.

Rather than matching the acceleration at the retail level, inflation at the wholesale level fell to a record low.  The April producer price index (PPI) was up just 1.4% year-over-year, after a rise of 1.8% in the year to March.

The report was released today by INEGI, the official statistics agency.

Comment:  The recent spike in Mexican inflation stems in large part from food supply shocks.  The biggest problem has been a recent discovery of avian influenza in Mexico, which led to the mass culling of flocks and crimped supplies of eggs and chicken.  Another challenge in April was a sharp rise in mass transit fares in Mexico City.  Because these are one-off factors, their impact will probably dissipate over time.  The stability of core inflation and the sharp drop in wholesale inflation suggest price pressures are still generally limited.  The outlook for Mexican inflation remains benign for the time being.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1304

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