MexECON Blog

November CPI Rises 4.2 Percent YOY

Mexico's November consumer price index (CPI) was up 4.2% from the same month one year earlier, after increases of 4.3% in October and 4.2% in September.  According to the report, the slight slowdown in inflation during November came mostly from declining prices for some foods, such as onions and chicken, and for gasoline.  Excluding the volatile categories of fresh foods, energy, and government-set prices, the November "core" CPI was up 3.3% year-over-year.  Core inflation has now been stuck at 3.3% for three straight months.

At the wholesale level, inflation moderated more significantly.  The November producer price index (PPI) was up just 2.7% year-over-year, after increases of 2.9% in October, 3.0% in September, and 3.3% in August.

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

Comment:  Mexican consumers have been discouraged by high and rising prices this year, so the slight moderation in inflation during November is welcome news.  Cooler inflation may enable consumers to buy more aggressively during the holiday shopping season.  Moreover, the steep decline in wholesale inflation means there are less price pressures in the pipeline.  Nevertheless, the policymakers at Banco de México will probably remain concerned that inflation is not falling rapidly toward their goal of 3.0%.  With core inflation stuck above that level, and with the recent weakness in the peso threatening to eventually boost prices for imported goods and services, it is not clear that inflation will decline to the policymakers' goal as soon as previously expected.  In a word, today's report still points toward higher interest rates sometime in the coming months.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1411

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