Mexican inflation experienced an increase in the first half of January, primarily driven by higher prices of fresh produce. However, core inflation continued its downward trend.
According to the National Statistics Institute, the consumer price index (CPI) rose by 0.49% compared to the end of December, resulting in a year-on-year increase of 4.90%. Meanwhile, core CPI, which excludes energy and fresh produce, grew by 0.25% during the first two weeks of the year and was up 4.78% from the previous year.
For the entire year of 2022, Mexican inflation stood at 4.66%, marking the lowest level in three years. Core inflation, on the other hand, reached 5.09%.
During the first two weeks of January, fresh fruit and vegetable prices saw a significant increase of nearly 5%. This surge was led by a significant 26% rise in tomato prices. Additionally, cigarette, soft drink, and restaurant prices also experienced an upward trend. In contrast, airfares and tourism packages witnessed a decline following the holiday season.
Given the recent rise in inflation since October, the Bank of Mexico has adopted a cautious approach towards interest rate cuts in order to bring inflation back to its target level of 3%.
It is widely anticipated that the central bank will maintain its current overnight interest-rate target of 11.25% at its Feb. 8 monetary policy meeting. However, most banks surveyed by Citigroup’s Citibanamex expect the central bank to implement its first rate cut in March.
