MexECON Blog

July CPI Rises 3.5 Percent YOY

Mexico's July consumer price index (CPI) was up 3.5% from the same month one year earlier, after increases of 4.1% in June and 4.6% in both May and April.  Mexican inflation is now at its lowest level since January.  Continuing the pattern of the last several months, the cooling in July came mostly from lower prices for agricultural goods such as tomatoes, grapes, eggs, and chicken.  Excluding the volatile categories of fresh foods, energy, and government-set prices, the July "core" CPI was up just 2.5% year-over-year, compared with an increase of 2.8% in the year through June.

At the wholesale level, inflation continued to fall as well.  The July producer price index (PPI) was up just 1.0% year-over-year, after increases of 1.1% in June and 1.2% in May.

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

Comment:  With the stable-to-downward trend in core inflation and the continuing drop in wholesale price pressures, it appears that Mexican inflation will continue to moderate in the coming months.  That should come as a relief to Mexican consumers, who might start spending more freely again.  It could also allow policymakers at Banco de México to cut interest rates further if necessary to support the economy, though new rate cuts are by no means certain.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1307

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