Mexico Inflation April 2022

Mexico

Mexico: Inflation comes in at highest level since January 2001 in April

May 9, 2022

Consumer prices increased 0.54% from the previous month in April, which was below March's 0.99% increase. April's result marked the weakest reading since December 2021. The softer rise was primarily due to softer growth in prices for food, beverages and tobacco. In addition, price pressures for housing declined.

That said, despite the softer month-on-month reading, the overall price environment remained challenging, as headline inflation increased to 7.7% in April from March’s 7.5%. April's figure was the highest inflation rate since January 2001 and well above the Central Bank’s 2.0%–4.0% target range. Meanwhile, the trend pointed up mildly, with annual average inflation coming in at 6.6% in April (March: 6.5%). Finally, core inflation rose to 7.2% in April, from March’s 6.8%.

In early May, the government announced measures to contain inflation, which include a six-month agreement with the private sector to contain prices for 24 key foodstuffs, a plan to boost grain production and the temporary removal of tariffs on basic imports. The impact is likely to be a modest reduction in headline inflation, although this will still stay well above the Bank’s target for the remainder of the year.

On the impact of the measures, Goldman Sachs’ Alberto Ramos said:

“Increasing the supply of food and grains, reducing import tariffs and staying away from coercive measures and outright price controls are positive developments. However, it is unclear how food supply can increase significantly in the short-term, and given rising fertilizer and other production costs any additional local food and grains supply is likely to still be more expensive […] Overall, in our assessment the announced measures are no substitute for a conservative calibration of monetary and interest rate policy.”

Panelists surveyed by FocusEconomics see inflation ending 2022 at 5.6%, which is up 0.8 percentage points from last month’s forecast. For 2023, the panel sees year-end inflation at 4.0%.


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Mexico Inflation April 2022 1

Note: Month-on-month and year-on-year changes of consumer price index (CPI) in %.
Source: Mexico National Statistics Institute (INEGI) and FocusEconomics calculations.


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