Mexico: Inflation was stable in May
Inflation came in at 4.7% in May, matching April’s result and above the Central Bank’s 2.0%–4.0% target range. However, the reading was below market expectations of 4.8%. Looking at the details of the release, higher price pressures for transport and food offset lower price pressures for clothing.
The trend pointed down mildly, with annual average inflation coming in at 4.6% in May (April: 4.7%). Meanwhile, core inflation edged down to 4.2% in May, from April’s 4.4%.
Finally, consumer prices dropped 0.19% from the previous month in May, contrasting the 0.20% rise seen in April.
Mexico’s lower-than-expected May inflation reading raises the chance of interest rate cuts at the Central Bank’s next meeting on 27 June, a scenario which most of our panelists anticipate. That said, currency weakening in the wake of June’s landslide election victory for the incumbent MORENA party could give the Central Bank cause for caution.