Mexico Inflation February 2017


Mexico: Inflation keeps drifting higher in February

March 9, 2017

Consumer prices in Mexico firmed 0.58% from a month earlier, a touch above the 0.55% increase the markets had expected. February’s increase followed the 1.70% jump in January, which had resulted from the hike in gasoline prices (gasolinazo). Notably, February’s increase was solely the result of a spike in core prices and this should continue in the coming months due to the pass-through from a weaker peso.

Inflation rose from 4.7% in January to 4.9% in February, marking the highest level since March 2010. Inflation now remains above the 4.0% upper bound of the Central Bank’s target range, and is expected to remain there for most of the year.

The closely-watched core consumer price index—which excludes volatile categories such as fresh food and energy—jumped 0.76% in February from the previous month, which was its highest reading in more than three years and came in above the 0.58% rise in January. Core inflation jumped from 3.8% in January to 4.3% in February, the highest rate seen since March 2010.

Coupled with expectations that the U.S. Federal Reserve will increase interest rates in March, the deterioration in core and headline inflation is likely to drive the Central Bank to act at its late March monetary policy meeting and hike interest rates.

In its inflation report for March, the Central Bank highlighted that it expects inflation to remain above its 3.0% target for most of the year and to gradually converge to the target toward the end of 2018. Panelists surveyed by FocusEconomics this month expect inflation to end 2017 at 5.1%, which is up 0.1 percentage points from last month’s forecast. For 2018, the panel sees year-end inflation at 3.7%.

Author:, Senior Economist

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Mexico Inflation Chart

Mexico Inflation February 2017 0

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

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