Inflation in Mexico remains above 7%: electricity, gasoline and tortilla increased in March

The National Institute of Statistics and Geography (Inegi) reported that in the first half of March 2022, inflation grew by 0.48% compared to the previous fortnight and highlighted that prices of agricultural products grew by 0.24% and those of energy and tariffs authorized by the government 1.35% to biweekly rate.

With this new 0.48% increase in the National Consumer Price Index (INPC), overall annual inflation stood at 7.29%, Inegi highlighted.

The products that suffered slight price increases during the first half of March are domestic gas LP, low-octane gasoline, electricity, air transport, while in food, an upward variation could be observed in the tortilla, egg, onion, avocado, as well as restaurants.

The good news for Mexicans' pocket is that products such as lemon, chicken, potato and chayote had slightly low prices.

According to Inegi data, the entities that suffered the greatest inflationary pressure were Yucatan, Campeche, Morelos, Guerrero and Oaxaca.

Inegi contrasted that in the same half of 2021, inflation was 0.53% and annual inflation was 4.12%. T he underlying price index increased by 0.35% biweekly and 6.68% annually.

The autonomous body detailed that the non-core price index increased by 0.86% at the biweekly rate and 9.10% at the annual rate.

Within the underlying index, at a biweekly rate, the prices of goods rose 0.49% and those of services 0.20%.

Finally, Inegi stressed that the price index of the minimum consumer basket had a biweekly increase of 0.51% and an annual increase of 7.88%, considering that in the same period in 2021, the corresponding figures were 0.57 and 4.81%, in that order.

Overall inflation in Mexico accelerated above expectations in February and again far exceeded the official target of 3% +/- one percentage point, while the core variable reached its highest level in more than 20 years, some analysts consulted by Reuters said Tuesday.

For this reason, they consider that the Banco de México (Banxico) would raise its benchmark rate this week for the seventh consecutive time, due to high inflation and following in the footsteps of the Fed.

According to the survey, 24 out of 26 analysts consulted expect Banco de México (Banxico) to increase the target for the overnight Interbank Interest Rate by 50 basis points (bp) to 6.50%. One participant projected that the entity would increase the rate by only 25 bps and another by 75 bps.

“The conditions for a new squeeze are clear. The Russian invasion of Ukraine has had an adverse effect on inflation and financial conditions in a context of high challenges on both fronts,” said Grupo Financiero Banorte in an analysis note.

Last week, the Federal Reserve (Fed) raised interest rates by a quarter of a percentage point and its president, Jerome Powell, said on Monday that moving forward the US central bank could act more aggressively if necessary to combat the advance of inflation.

The Banco de México, which in its last six meetings has increased the key rate by a total of 200 basis points to its current level of 6%, will publish its second monetary policy statement of the year on Thursday at 1 p.m. on Thursday at 1 p.m.

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