Inflation in Mexico exceeds market forecasts in early January, rate hikes expected

MEXICO CITY, Jan 24 (Reuters) – Mexico’s headline inflation accelerated and exceeded expectations in early January, data from the national statistics agency showed on Tuesday, marking the first monthly pickup since September as markets brace for fresh interest rate hikes ahead.

Annual headline inflation in the first half of the month reached 7.94%, beating both the 7.77% recorded in the month of December and economists’ forecasts of 7.86%, though still below the two-decade high of 8.70% registered in August and September.

Meanwhile the core index, which strips out some volatile food and energy prices, hit 8.45% on an annual basis, back on the rise after showing some relief in December. It also exceeded forecasts of 8.34%.

That means annual inflation remains far above the Bank of Mexico’s target rate of 3%, plus or minus one percentage point.

In an effort to tame rising prices, the central bank has increased its key lending rate by 650 basis points to 10.50% during the current hiking cycle, which began in June 2021.

Banxico, as the central bank is known, is considering another interest rate hike at its next monetary policy meeting on Feb. 9, according to the minutes of its last board meeting – a move markets already anticipate, including a potential higher-than-expected hike.

The latest headline inflation figure, Capital Economics’ senior emerging markets economist Jason Tuvey said, “means that there is a growing risk that Banxico delivers a bit more tightening beyond the 25bp increase to 10.75% that we expect at February’s meeting.”

It is unlikely that the bank will make any cuts to the interest rate in the next six months, Bank of Mexico board member Jonathan Heath said in an interview last week.

In the first half of January, according to statistics agency INEGI, consumer prices rose 0.46% compared to the previous two-week period, while the core index rose 0.44%, both also exceeding market estimates.

“We still believe that deteriorating domestic fundamentals, lower raw material prices and improving global supply conditions will push inflation down over the coming months,” Pantheon Macroeconomics’ chief Latin America economist Andres Abadia said.

“But today’s numbers suggest that Banxico will remain particularly hawkish in the near term.”

Mexico’s Latin American peer Brazil, where monetary tightening is on pause, also released mid-month inflation data on Tuesday, with prices slightly beating market forecasts.

Subscribe here for just .08 cents per day to read subscriber content, join the PVDN newsletter, and browse with site ad-free. Support local news.

Trending news on PVDN

  • Puerto Vallarta Malecón will be repaired due to damage caused by high waves In a regular session of the Tourism and Economic Development Commission in cooperation with the Environment and Public Services Commissions, the opinion derived from a building agreement initiative was approved this Wednesday to carry out the repair of the Puerto Vallarta Malecón, due to the damage it suffered as a result of the high waves.…
  • Crocodile captured in Puerto Vallarta at Parque Lineal Elements of the Municipal Government’s Environment Department captured an adult crocodile approximately 2.63 meters long, in Linear Park, near the Ex Haciendas del Pitillal, this Wednesday. The specimen is marked with the number 530 and was relocated to the El Salado estuary. This happens in the commemoration of the Day of the Biologist, professionals who…
  • Kim Kuzma and Band in Dinner & A Show at Coco’s Kitchen Jan 27th Coco’s Kitchen in Vallarta’s Zona Romantica will present a special ‘Dinner & Show with Kim Kuzma’ every other Friday evening this season. The next performance happens on Friday, January 27th. Come and enjoy a beautiful evening of Acoustico-Style Music with Kim Kuzma and the band along with a fabulous 3-course dinner, created by Coco herself.…
  • Puerto Vallarta recognizes heroic action of policeman who saved tourist from drowning Officer Alejandro Abarca Álvarez, a tourist area policeman, who on January 15 saved the life of a tourist from Guadalajara after being swept away by ocean currents, was recognized for his heroic actions. The rescue was registered at around 5:00 pm at Camarones Beach next to the Rosita Hotel and according to the report of…
  • American woman died after falling from a building in Mexico City A woman identified as Anna died on the morning of January 23 after falling from a balcony located in a building in the Nápoles neighborhood, Benito Juárez, Mexico City. According to the reports, the 30-year-old woman and American nationality lost her life on the outskirts of a home located at number 17 Texas Street. Paramedics…
Puerto Vallarta News

Compare Listings

Title Price Status Type Area Purpose Bedrooms Bathrooms
error: Please contact PVDN if you wish to reprint something from this website