Mexico closed the month of August with annual general inflation of 8.70%, according to the National Institute of Statistics and Geography (Inegi) on Tuesday, where the prices of some agricultural products were those that presented the greatest price increase.
This figure exceeded the estimates of analysts, who expected 8.67% year-on-year in August for the National Consumer Price Index (INPC), which represents a level not seen since December 2000.
This new indicator was above 8.15%, the rate in July, according to Inegi data.
According to the statistical body, the prices of food and beverages increased by 12.94% compared to the same month last year.
The Institute detailed that at a monthly variation (July) the prices of agricultural products rose 0.98% while those of energy and tariffs authorized by the government fell 0.11%.
Given this, Banxico raised its interest rate by 75 basis points on August 11, to 8.5%, and anticipated that it could continue to increase it if necessary to combat price increases.
Last week, the Bank of Mexico (Banxico) raised its forecast for 2022 inflation, warning that the effects of shocks on prices could be prolonged and even worsen.
In its quarterly report, Banxico pointed out that in the third quarter of the year, that is, from July to September, inflation in Mexico will reach its maximum peak, although the decline will not be as fast and the rest of the year will continue with inflationary pressures.
The central bank forecasts that headline inflation will reach 8.1% in the fourth quarter of 2022, that is, in the months from October to December, and core inflation will reach 7.6%, from previous estimates of 6.4% and 5.9%, respectively.
To deal with inflation, the Bank of Mexico has increased the interest rate in its last ten meetings, to its current level of 8.5%, to try to reach the inflation target of 3% +/- percentage point.
The key reference rate in Mexico has reached the level of 8.5% to contain inflation, but perhaps the central bank will have to raise it a little more to help reduce prices, said the deputy governor of Banxico, Gerardo Esquivel.
“We all agree on the (government) board to raise the interest rate and to take it to a level where it begins to work as a containment of inflation,” Esquivel said in an interview he gave last Thursday night to a local media and that he shared on his Twitter account on Friday.
“We have already reached that level now, we may need to go a little further in the restrictive zone to guarantee that the reduction in inflation occurs,” he added.
Esquivel pointed out that subsequent hikes in the key rate, currently at 8.5%, should be done cautiously so as not to affect economic growth.
“Although we have to raise the rate, although we have to take it to a restrictive terrain, we must be careful that this restriction is not excessive so that it does not affect the recovery process in a very significant way,” he added.
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