MEXICO CITY, Mexico – The annual inflation rate in Mexico has dropped to its lowest level since March 2021, delivering a much-needed reprieve for Mexican consumers and exceeding analysts’ predictions.
According to the National Institute of Statistics and Geography (Inegi), the inflation rate stood at 5.18% for the first half of June, representing a decrease from its March 2021 level of 4.12%, as per data from the National Consumer Price Index (INPC).
The INPC saw a marginal increase of 0.02% in the first half of June compared to the previous fortnight, surpassing forecasts made by analysts. The Citibanamex Survey of Expectations projected that the INPC would stand at 5.3% in July.
While the inflation outlook seems positive, some concerns remain, according to Gabriela Siller, Director of Economic Analysis at Grupo Base. She warned of potential risks that could lead to an increase in general inflation, including heightened demand driving up service prices, a surge in the cost of agricultural products, possible disruptions to the grain corridor of the Mar Negro, and increased energy costs due to greater electricity demand from wider usage of air conditioners.
The core inflation rate, which measures the long-term trajectory of general inflation and excludes the most volatile prices, reached an annual rate of 6.91%. This is its lowest level since the second half of March 2022. Over the last fortnight, core inflation rose by 0.11%, marking its smallest increase in a year. “Merchandise inflation stood at 8.33% annually, the lowest since the first half of February 2022, and has been decreasing for eleven consecutive fortnights,” Siller noted.
Non-core inflation, which includes products with more volatile prices, reported a decrease of 0.26% in the last fortnight, marking its third slowdown this year. Within this index, agricultural product prices dropped by 0.24%, and energy prices and government-authorized tariffs fell by 0.27%.
In a comparison with May, the products that experienced the most significant price drops were eggs, with a decrease of 7.19%, lemons with a drop of 8.58%, and domestic liquefied petroleum gas (LP), which saw a price decline of 3.46%.
This development comes at a crucial time as the Board of Governors of the Bank of Mexico (Banxico) prepares to announce its monetary policy this Thursday. Experts anticipate that the central bank will maintain the current interest rate at 11.25%.
