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Mexico Inflation August 2023

Mexico: Inflation falls to lowest level since February 2021 in August

Inflation ticked down to 4.6% in August, which followed July’s 4.8% and was in line with market expectations. August’s result represented the weakest inflation rate since February 2021, but was still above the Central Bank’s 2.0%–4.0% target range. Looking at the details of the release, lower price pressures for clothing and food drove the slowdown.

Annual average inflation fell to 6.8% in August (July: 7.1%). Meanwhile, core inflation fell to 6.1% in August from July’s 6.6%, marginally below market expectations.

Finally, consumer prices increased 0.55% over the previous month in August, accelerating from the 0.48% rise recorded in July.

Looking ahead, headline inflation is forecast to average slightly above 4% for the remainder of this year, buoyed by the recent uptick in global oil prices but contained by past peso appreciation. August’s inflation data is unlikely to radically alter the Central Bank’s stance: Banxico is expected to start cutting rates in Q4 this year or Q1 2024.

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