Mexico: Inflation keeps trending downwards
December 7, 2012
In November, consumer prices added 0.68% over the preceding month. The reading came in above the 0.51% rise seen in October but surprised the market on the downside, as analysts expected a 0.83% increase. Core consumer prices remained subdued (+0.05% month-on-month), driven by a significant 18.5% monthly drop in mobile phone services, owing to discounts during "El Buen Fin" - the Mexican version of the "Black Friday" in the United States. In contrast, energy tariffs, which are considered non-core prices, added a strong 7.35% over October amid the seasonal phasing out of the summer electricity subsidies.
Owing to the relatively subdued November print, annual headline inflation continued trending down, falling from 4.6% in October to 4.2%, which represents the lowest rate in six months. Annual core inflation also dropped from 3.6% in October to 3.3% in November.
The Central Bank expects inflation to continue moderating in December and close the year slightly below 4.0%. For next year, the Bank projects inflation to end the year at a range between 3.0% and 4.0%.