MexECON Blog

March CPI Rises 3.8 Percent YOY

Mexico's March consumer price index (CPI) was up 3.8% from the same month one year earlier, after increases of 4.2% in February and 4.5% in January.  The fall in inflation during March came in large part from "base effects" in the prices for agricultural and energy goods.  Prices for those goods jumped dramatically in March 2013, so the percentage change to March 2014 was relatively muted.  However, even excluding the volatile categories of fresh foods, energy, and government-set prices, the March "core" CPI was up just 2.9% year-over-year, compared with its increases of 3.0% in February and 3.2% in January.

At the wholesale level, inflation also fell.  The March producer price index (PPI) was up 2.2% year-over-year, after a rise of 2.4% in February.

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

Comment:  Mexican consumer prices spiked in January, as new sales taxes took effect.  However, the impact on the country's inflation rate is expected to moderate over time.  The fall in inflation during March is evidence of that, though the base effects also were important.  The jump in prices at the beginning of the year discouraged consumer spending, but as consumers get used to the new prices, and as the inflation rate moderates, they may open their wallets again.  That would help offset the other headwinds facing the Mexican economy, but it is still too early to know whether it is indeed happening.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1403

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