MexECON Blog

September CPI Up 4.2 Percent YOY

Mexico's September consumer price index (CPI) was up 4.2% from the same month one year earlier, accelerating from the increases of 4.1% in both August and July and 3.8% in June.  Inflation in Mexico is now running at its fastest pace since February.  According to the report, the acceleration in September stemmed mostly from a jump in prices for food products such as beef, tomatoes, and onions.  Excluding the volatile categories of fresh foods, energy, and government-set prices, the August "core" CPI was up just 3.3% year-over-year, after a rise of 3.4% in August.

At the wholesale level, inflation moderated.  The September producer price index (PPI) was up just 3.0% year-over-year, after increases of 3.3% in August and 2.8% in July.

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

Comment:  Relatively high inflation is one factor weighing on Mexican consumer confidence, and I believe it will continue to be a problem in the coming months.  In spite of the modest declines in wholesale inflation and core consumer inflation during September, both are clearly worsening.  At the very least, the sharp drop in the value of the peso during the summer will likely continue to boost the cost of imported goods.  That is further reason to expect that Banco de México's next policy change will be to raise interest rates, though any such change may be down the road.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1409 Corrected

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