Overview of Inflation Report by INEGI
According to the National Institute of Statistics and Geography (INEGI), Mexico’s consumer inflation accelerated in August, with the National Consumer Price Index (INPC) showing a monthly advance of 0.06%, resulting in an annual inflation rate of 3.57%.
Comparison with Market Projections
The August figure was slightly below market expectations. A Reuters survey indicated that analysts projected an inflation rate of 3.58%.
Despite the increase, inflation remained within the Banco de México’s (Banxico) target range of 3% ± 1 percentage point for the second consecutive month.
In August, Banxico reduced its interest rate again, but to a lesser extent than previously.
With a 25 basis point cut, the target interest rate was set at 7.75%.
Accelerated Non-Core Inflation
The INEGI report also highlighted that non-core inflation accelerated from 1.14% to 1.38% annually in August.
- Agricultural products increased by 1.21% annually, with a notable 8.04% drop in fruit and vegetable prices.
- Energy and government-authorized tariffs saw a 1.51% annual price increase.
Core inflation, which excludes more volatile items and is the basis for Banxico’s monetary policy decisions, remained unchanged at 4.23% annually.
- Goods prices rose by 4.05%, while services increased by 4.40%.
Most Impactful Price Changes
In August, “own home” had the most significant impact on the consumer price index, with a 0.27% monthly increase.
- “Lunch spots, cantinas, tortillerias, and taco stands” saw a 0.63% monthly increase.
- “Serrano chili,” crucial for Mexican salsas, experienced a 34.95% price hike.
On the other hand, “chicken” had the most substantial positive effect on inflation due to its 4.02% monthly price drop.
- “Tomato” prices fell by 11.46%, and “air transportation” decreased by 9.76%.
Key Questions and Answers
- What is the current inflation rate in Mexico? The annual inflation rate in Mexico accelerated to 3.57% in August, according to INEGI.
- How does this compare to market expectations? The August inflation figure was slightly below the market projection of 3.58%.
- Where does inflation stand concerning Banxico’s target? Inflation remained within Banxico’s 3% ± 1 percentage point target range for the second consecutive month.
- What are the key contributors to the recent inflation acceleration? Non-core inflation, which excludes more volatile items, accelerated to 1.38% annually, driven by increases in agricultural products and energy tariffs.
- Which products had the most significant impact on inflation in August? “Own home” and “lunch spots, cantinas, tortillerias, and taco stands” had substantial impacts on the consumer price index. Meanwhile, “chicken” and “tomato” prices dropped significantly.
