Inflation in Mexico hits 17-month low

Puerto Vallarta (PVDN) – Inflation in Mexico slowed for the second consecutive month and in March stood at 6.85 percent annually, its lowest level in 17 months, according to data published by the National Institute of Statistics and Geography (INEGI).

The decline in inflation was better than expected by the market, whose estimate was 6.89 percent annually, according to the most recent Citibanamex survey.

Compared to February, the National Consumer Price Index (INPC) rose of 0.27 percent, the lowest in 10 months; the market estimate was 0.31 percent per month.

Although inflation has shown signs of slowing down, it is still outside the target range of the Bank of Mexico (Banxico) which is 3 percent +/- one percentage point, which it has been above for 25 months,

“The data brings a sigh of relief to Banxico, confirming that inflationary pressure is now steadily easing. Headline inflation is at its lowest level since October 2021 and we expect the downward trend to continue in the coming quarters,” Andrés Abadia, chief economist at Pantheon Macroeconomics, wrote in a memo.

In subjacent inflation, a deceleration was also observed for the second consecutive month at 8.09 annual percent in March, being its lowest level in seven months; however, it was above the forecast of 8.06 percent.

In monthly terms, it showed a decline of 0.52 percent, the lowest in four months, and above the 0.50 percent that analysts anticipated.

“The two inflations (general and subjacent) are going to continue falling in the rest of the year, more due to the comparison base effect, which is good, but at the rate that the subjacent price increases move (0.5%) up to now, it will take inflation to 6% at the end of the year, twice the target of 3%”, the director for Latin America at Moody’s Analytics, Alfredo Coutiño, wrote on Twitter.

However, the pressures in the service sector persist, which had a monthly increase of 0.62 percent, the highest variation in 15 months, and at an annual rate of 5.71 percent, a level not seen since February 2003.

While in merchandise, they slowed down for the second month in a row and registered a monthly slowdown of 0.45 percent, and at an annual rate it was located at 10.12 percent, its lowest rate in eight months

Meanwhile, the non-core component fell 0.50 percent monthly and settled at 3.27 percent annually in March, the lowest in 26 months.

The prices of agricultural products fell 0.67 percent, their biggest decrease in 27 months, and those of energy and tariffs authorized by the government fell 0.36 percent monthly, after two months on the rise.

Among the products with the biggest drop in prices during March, compared to February, domestic LP gas, with a 4.16 percent decline; tomato, 6.87 percent decline, and nopales, 21.33 percent decline.

The prices of products that had the greatest increase were air transport, with 25.99 percent; lemon, 26.73 percent, and home prices, 0.32 percent.

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