Mexico's June consumer price index (CPI) was up 3.8% from the
same month one year earlier, after increases of just 3.5% in both
May and April. Prior to that, the March index was up 3.8%
year-over-year. According to the report, the jump in
inflation during June came mostly from a surge in prices for foods
such as beef, tomatoes, and potatoes. Excluding the volatile
categories of fresh foods, energy, and government-set prices, the
June "core" CPI was up just 3.1% year-over-year.
At the wholesale level, inflation moderated. The June
producer price index (PPI) was up just 2.0% year-over-year, after a
2.8% rise in the year to May.
The report was released today by INEGI, the official statistics
Comment: Mexican consumer prices
jumped at the beginning of 2014, when new sales taxes took
effect. The January CPI was up 4.5% year-over-year.
Since then, inflation has been moderating, but as I warned after
the price report last month, the improvement seems to be petering
out. Accelerating price hikes at the wholesale level have
been an especially bad omen, though the June moderation in the PPI
offers some encouragement. If inflation fails to fall any
further, it could continue to be a headwind for consumer spending
and for general economic growth.
Patrick Fearon, CFA
Vice President, Fund Management