MexECON Blog

April CPI Rises 3.5 Percent YOY

Mexico's April consumer price index (CPI) was up just 3.5% from the same month one year earlier, after increases of 3.8% in March, 4.2% in February, and 4.5% in January.  Inflation in Mexico is now at its lowest since October.  The decline in inflation during April came mostly from lower prices for foods such as lemons, limes, onions, and plantains.  Prices also fell for electricity, natural gas, and other types of energy.  However, excluding the volatile categories of fresh foods, energy, and government-set prices, the April "core" CPI was up 3.1% year-over-year, after a rise of just 2.9% in March.

At the wholesale level, inflation accelerated.  The April producer price index (PPI) was up 2.5% year-over-year, after a rise of 2.2% in March.  The April rise in the PPI was the biggest since late 2012.

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

Comment:  The recent fall in consumer inflation had been widely expected.  Prices surged at the beginning of the year because of new sales taxes that took effect on January 1, but that impact is now dissipating.  In addition, food prices have been cooling.  That all bodes well for the Mexican consumer.  Indeed, the April consumer confidence index released this week shows a continued rebound in optimism.  Lower inflation and improved sentiment could eventually encourage greater consumption spending and provide a boost to Mexican economic growth.  However, there is no clear indication that spending is strengthening just yet.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1404

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