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
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
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