MEXICO (Times Media Mexico/Excelsior) – During July the National Consumer Price Index (INPC) registered a rise of 0.66% over the previous month. With this, the annual inflation stood at 3.62%, its highest level in five months, reported the National Institute of Statistics and Geography (Inegi).
With this result, the indicator accumulated 14 months within the target range of the Bank of Mexico (Banxico), which is 3.0% + / – one percentage point, which, according to experts, gives the central bank room to continue cutting the reference rate, which currently stands at 5.00 percent.
“The inflation outlook allows for keeping the window open for the central bank to continue to relax. Specifically, we anticipate a further cut this year of 50 basis points to bring the rate to 4.50 percent,” said Alejandro Padilla, executive director of Economic Analysis and Financial Strategy of Markets at Banorte.
Regarding general inflation, he predicted that it would remain within the central bank’s tolerance range, closing the year at 3.40 percent. “The outlook is still highly uncertain. The magnitude of the contraction in economic activity and demand weighs negatively on prices”.
Given the effects of the depreciation of the exchange rate and the interruption in the supply of goods and services, among others, underlying inflation has resisted falling, and some of its components have even been pushed up. Besides, the prices of energy and agricultural products could continue to exhibit high volatility.
The agency chaired by Julio Santaella said that core inflation, which does not take into account the products with high volatility in their prices, grew 0.40% per month, which stood at 3.85% annual rate. As to non-underlying inflation, a component that takes into account the products with high volatility in prices such as energy and agricultural products registered a rise of 1.48% monthly and 2.92% annually.
In the underlying price index, goods rose 0.64% and services 0.13% per month. Within the non-underlying price index, agricultural products fell 0.03% per month.
PRICE BALANCE
The products with increases that had the greatest impact on inflation during the seventh month of the year were the low-octane gasoline, with a rise of 5.64 percent, chicken, 5.60 percent, and domestic LP gas, with an advance of 2.33 percent.
The products that presented decreases in their costs to the public and that influenced more in the inflation were the serrano chili, with a reduction of 29.20 percent; the egg reduced 3.36 percent; and the tomato, with a fall of 4.48 percent.
