Mexico closes 2022 with the highest inflation rate in 22 years

The Mexican economy registered an annual inflation rate of 7.82 percent in December, data that meant its highest year-end closing since 2000, according to Inegi.

Throughout 2022, the finances of Mexicans suffered from the increase in the cost of goods and services, which linked two year-ends outside the target range of the Bank of Mexico (Banxico), which is 3 percent +/- one percentage point.

Although it was its highest closing of the year since 2000, the data was below the 7.88 percent estimated by analysts consulted by Citibanamex in its most recent survey.

In November there was a slight rebound since in the penultimate month of the year inflation was 7.80 percent per year.

During December, the National Consumer Price Index rebounded 0.38 percent, compared to the previous month, the lowest since May of that year. The market consensus indicated that it would accelerate by 0.44 percent.

High inflation has been a worldwide phenomenon, which among its main factors highlighted the conflict between Russia and Ukraine that began in February 2022.

On the underlying side, which excludes goods and services with more volatile prices such as agriculture, energy, and government tariffs, there was an acceleration of 0.65 percent per month, reaching 8.35 percent annually, its highest level at the end of the year since 1999.

Despite this, there was a slowdown compared to the 8.51 percent annual level of November, so the December data meant breaking a 24-month consecutive upward streak.

“In December, core inflation was 0.65% m/m, above the 0.64% estimated by the market. It is the second highest for a twelfth month since 1999, after that of 2021,” wrote Monex’s deputy director of economic analysis, Janneth Quiroz.

In the breakdown of the data, the prices of merchandise increased by 0.74 percent; while services became more expensive by 0.53 percent in December compared to the previous month.

“Despite the lower core inflation risks persist, since the drop was partly due to a comparison base effect since in December 2021 core inflation was very high,” wrote the director of economic analysis at Base Bank, Gabriela Siller.

Meanwhile, the non-core component fell 0.40 percent monthly and settled at 6.27 percent annually. In 2021 it closed at 11.74 percent per year.

The prices of agricultural products became more expensive by 0.50 percent and those of energy and tariffs authorized by the government fell 1.15 percent monthly in December.

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