Inflation on the rise as Mexico anticipates another interest rate cut

Mexico’s yearly ostentation complaint accrued for a 3rd consecutive period successful April, authoritative information showed connected Thursday, but it remains wrong the Bank of Mexico’s people range, leaving the doorway unfastened to an involvement complaint chopped adjacent week.

The nationalist statistic bureau INEGI reported that yearly header ostentation deed 3.93% past month, up from 3.80% successful March. Month-over-month ostentation was 0.33%.

The yearly speechmaking was conscionable supra the 3.90% statement forecast of analysts and economists surveyed by some Reuters and Bloomberg.

The yearly halfway ostentation rate, which excludes volatile nutrient and vigor prices, besides came successful astatine 3.93%, up from 3.64% successful March.

The increases successful yearly ostentation successful February, March and April came aft the header complaint deed a four-year debased of 3.59% successful January.

In 2022, the yearly header complaint peaked astatine a two-decade precocious of 8.7% successful August and September. The Bank of Mexico (Banxico) began a 21-month monetary argumentation tightening rhythm successful June 2022 that included 15 involvement complaint hikes totaling 725 ground points.

The Bank of Mexico raised involvement rates to implicit 11% earlier opening to loosen monetary argumentation past year. (Wikimedia Commons)

The cardinal bank’s cardinal involvement complaint peaked astatine a record-high 11.25% and remained astatine that level for a twelvemonth earlier an easing rhythm began successful March 2024. Banxico’s benchmark complaint is present acceptable astatine 9% aft 50-basis-point cuts successful some February and March.

The governing committee of the cardinal slope volition clasp its adjacent monetary argumentation gathering adjacent Thursday, May 15.

Bloomberg reported that the header ostentation speechmaking successful April — conscionable wrong the Bank of Mexico’s 2%-4% people scope — apt keeps different 50-basis-point chopped “on the table.”

Reuters reported that the latest information “should let the Bank of Mexico to support lowering borrowing costs successful Latin America’s second-largest economy.”

“… Although economical maturation is not portion of Banxico’s mandate, analysts judge a anemic outlook stemming from commercialized tensions triggered by U.S. President Donald Trump’s sweeping tariffs adds to the statement for it to support easing monetary policy,” the quality bureau said.

Mexico’s system avoided a method recession successful the archetypal 4th of the year, increasing 0.2% compared to the erstwhile 3 months, according to preliminary INEGI data.

Early this year, prices for fruits and veggies went down portion nutrient prices went up. (Cuartoscuro)

Deputy Bank of Mexico Governor Jonathan Heath said Wednesday that the existent economical concern successful Mexico makes it “highly likely” that the cardinal slope volition proceed to little its cardinal involvement rate.

He said successful a Banorte podcast that the prevailing involvement complaint of the Federal Reserve successful the United States, and the quality betwixt that complaint and that of Banxico, won’t person overmuch of an interaction connected monetary argumentation determination making successful Mexico until the 2nd fractional of the year.

The Fed connected Wednesday held its involvement complaint scope unchanged astatine 4.25%-4.50%.

The important quality betwixt the Bank of Mexico’s cardinal involvement complaint and that of the Fed helped boost the Mexican peso against the US dollar for an extended period, but the peso weakened past twelvemonth owed to a scope of factors, including the ruling Morena party’s broad triumph successful the elections past June, Congress’ support of a arguable judicial betterment and Trump’s triumph successful the U.S. statesmanlike predetermination past November.

The peso has performed amended this year, appreciating from astir 20.6 to the dollar connected Dec. 31 to 19.57 to the greenback astatine 11 a.m. Mexico City clip connected Thursday.

Cheaper effect and vegetables, much costly meat 

INEGI’s information showed that effect and rootlike prices fell 2.45% connected a year-over-year ground successful February, portion nutrient prices accrued 8.25%.

Processed food, beverages and baccy were 4.42% much costly successful April than successful the aforesaid period past year, portion prices for non-food goods roseate 2.4%.

Services were 4.56% dearer compared to April 2024, portion vigor prices, including those for gasoline and electricity, accrued 2.99% connected an yearly basis.

With reports from El Economista, El Universal, Bloomberg and Reuters