Mexico: Inflation drops to a nearly five-decade low
September 9, 2015
Consumer prices in Mexico rose 0.21% in August over the previous month, which was up from the 0.15% increase observed in July, but fell short of the 0.24% increase the market had expected. The National Statistics Institute (INEG) reported that higher core consumer prices, particularly those that reflect the adjustment in school fares, were the main drivers behind the monthly increase. However, a slower increase in prices for fresh food and lower prices for tourism and airfares partially compensated for the increase.
Mexico’s inflation fell from 2.7% in July to 2.6% in August, falling to an unprecedented level last registered in 1968. As a result of the drop, inflation remained well below the Central Bank’s inflation target of 3.0%.
Meanwhile, the closely watched core consumer prices—which exclude volatile categories such as fresh food and energy and also provide more information regarding knock-on effect from the currency weakening in recent months—rose 0.20% in August over the previous month, which was up July’s 0.17% increase. Annual core inflation in August remained stable at 2.3% for the fifth consecutive month.
Author: Ricardo Aceves, Senior Economist