Inflation in Mexico exceeds expectations with a significant rebound
The inflation outlook in Mexico showed unexpected dynamism in November, registering an annual increase of 3.8%, according to official data published by the National Institute of Statistics and Geography (Inegi). This figure not only exceeds the 3.57% observed in October, but was above the projections of financial sector analysts, whose median was 3.68%. The National Consumer Price Index (INPC) experienced a monthly increase of 0.66%, marking the most pronounced advance so far this year and the highest rate for a month of November since 2021.
Key factors behind the price increase
The behavior of the general indicator was driven by specific pressures in certain areas. The factor with the greatest impact was the price of electricity, which shot up by 20.70% monthly due to the end of the warm season rate program in eleven cities. In the food sector, products such as serrano chili (+24.76%), zucchini (+17.05%) and tomato (+14.34%) showed considerable increases. Also contributing to the rise were professional services (+10.93%), collective transportation (+4.9%) and prices in food establishments such as loncherías, inns and taquerias (+0.82%).
On the contrary, some products attenuated the general increase with reductions in their prices. The lemon (-7.46%), avocado (-7.28%), rum (-5.43%) and orange (-3.97%) stood out.
Analysis of core and non-core inflation
Core inflation, considered a better indicator of the medium-term trend when excluding high volatility products, also showed a worrying rebound. Its annual rate was 4.43%, above the 4.28% in October, with a monthly increase of 0.19%. When disaggregating this index, the prices of services increased by 0.39% monthly (4.49% annually), while commercial goods registered a slight monthly contraction of 0.03%, although they maintain an annual rate of 4.43%.
For its part, the Non-Underlying Price Index, which groups together agricultural and energy products, presented a considerable monthly advance of 2.28%, taking its annual rate to 1.73%. Within this category, energy prices and rates authorized by the government rose 2.97% in the month. Finally, the Minimum Consumption Basket Price Index, which measures 176 basic products and services, registered an annual variation of 3.93%, indicating persistent pressure on the purchasing power of households with lower incomes.
This joint rebound in the general and underlying indicators suggests that inflationary pressures in the Mexican economy are broader and more persistent than anticipated, a fact that will undoubtedly be carefully analyzed by the monetary authority for its next policy decisions.
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