MexECON Blog

June CPI Rises 3.8 Percent YOY

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 agency.

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

CPI 1406

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