Mexico Inflation Rate Rises for First Time in 6 Months

Inflation rate in Mexico rose to 4.65 percent year-on-year in June 2018 from 4.51 percent in May and exceeding market expectations of 4.56 percent. It was the first increase in inflation since December, mainly due to higher cost of energy and fuels. The central bank noted that inflation could converge to the 3 percent target more slowly than initially estimated. Main reasons are linked to recent shocks including further peso depreciation caused by fears surrounding the future of NAFTA, presidential elections and rising cost of fuels.

Year-on-year, inflation continued to climb for: energy (15.22 percent vs 12.37 percent in May); housing (2.60 percent vs 2.57 percent); and other services including restaurants, telephone services, medical services and package tourist services (3.76 percent vs 3.73 percent). In contrast, prices increased at a slower pace for food, beverages & tobacco (4.49 percent vs 4.73 percent); education (4.81 percent vs 4.82 percent) and they fell further for fruits and vegetables (-1.40 percent vs -0.87 percent).

On a monthly basis, consumer prices increased 0.39 percent, compared to a 0.16 percent fall in May and market expectations of a 0.3 percent gain. Main upward pressure came from prices of energy (2.29 percent vs -2.39 percent in May), namely electricity (1.49 percent vs -22.32 percent) and gasoline (1.45 percent vs 1.08 percent); housing (0.24 percent vs 0.21 percent in May); other services (0.49 percent vs 0.47 percent) and fruits and vegetables (0.17 percent vs -2.69 percent), such as oranges (33.34 vs 26.08 percent); potatoes and other tubers (5.82 percent vs 4.20 percent) while cost of lemons fell much less (-21.29 percent vs -40.88 percent).

The core index, which strips out some volatile food and energy prices went up 0.23 percent during the month (0.26 percent in May) and was up 3.62 percent on a yearly basis (3.69 percent in May), hitting its lowest level since December of 2016.

Mexico Inflation Rate Rises for First Time in 6 Months

INEGI | Luisa Carvalho |
7/9/2018 2:37:06 PM