Mexico: Inflation rises above target in October
November 19, 2016
Consumer prices rose 0.61% from the previous month in October, which followed a similar increase in September. The result was a touch less than the 0.65% increase the markets had expected and reflected the unwinding of electricity subsidies, which caused energy prices to jump.
Inflation rose from 3.0% in September to 3.1% October, coming in above the Central Bank’s target of 3.0% for the first time since April 2015. This was in line with the Bank’s view that inflationary pressures are mounting.
Meanwhile, the closely-watched core consumer price index—which excludes volatile categories such as fresh food and energy—increased 0.28% in October from the previous month, which came in below the 0.48% rise in September. As expected, prices for core goods, which are the most likely to rise on a weak currency, led the monthly increase. Core inflation was unchanged at September’s 3.1% in October.
Inflation is expected to continue rising through the final quarter of 2016 in response to the sharp peso depreciation and the intensification of the effect of the currency pass-through on consumer prices.
Author: Ricardo Aceves, Senior Economist