MexECON Blog

October CPI Rises 4.3 Percent YOY

Mexico's October consumer price index (CPI) was up 4.3% from the same month one year earlier, accelerating from the increases of 4.2% in September, 4.1% in both August and July, and 3.8% in June.  Inflation in Mexico is now running at its highest since January.  According to the report, the acceleration in October stemmed entirely from a big jump in the cost of food products such as beef and onions and energy products such as electricity and gasoline.  Excluding the volatile categories of fresh foods, energy, and government-set prices, the October "core" CPI was up just 3.3% year-over-year, unchanged from the increase in September.

At the wholesale level, inflation continued to moderate.  The October producer price index (PPI) was up just 2.9% year-over-year, after increases of 3.0% in September and 3.3% in August.

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

Comment:  High and rising prices continue to be a headwind for the Mexican consumer, and they will probably continue to be a problem for a while yet.  At the very least, the recent decline in the value of the peso could increase the cost of imported goods and services.  Nevertheless, the recent fall in global oil prices and a change in government policy regarding energy price regulation could help to reduce the problem.  The fall in the rate of wholesale inflation is a particularly encouraging sign.  Banco de México may therefore be able to hold interest rates at their current low levels for a bit longer than expected, though its next policy move is still more likely to be a rate increase than a rate decrease.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1410

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