MexECON Blog

July CPI Rises 4.1 Percent YOY

Mexico's July consumer price index (CPI) was up 4.1% from the same month one year earlier, after increases of 3.8% in June and 3.5% in both May and April.  According to the report, the rise in inflation during July stemmed mostly from a jump in prices for food products such as tomatoes, onions, pork, and beef.  Excluding the volatile categories of fresh foods, energy, and government-set prices, the July "core" CPI was up just 3.2% year-over-year, after a rise of 3.1% in the year to June.

At the wholesale level, inflation rebounded strongly back to its level two months ago.  The July producer price index (PPI) was up 2.8% year-over-year, after a rise of 2.0% in June.

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

Comment:  After jumping in response to new sales taxes at the beginning of the year, Mexican inflation posted an encouraging moderation during the spring.  The reacceleration of inflation during the summer has therefore been quite a disappointment for many Mexicans.  Rising prices are probably one key reason for the big pullback in the July consumer confidence index, released earlier this week.  Looking forward, the dramatic plunge in the peso since late July has the potential to raise the cost of many imported items, pushing overall inflation even higher.  Stronger exports have recently given a boost to the Mexican economy, but if rising inflation continues to hurt consumer confidence and spending, the acceleration in economic growth will be limited.

Patrick Fearon, CFA
Vice President, Fund Management

CPI 1407

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