Mexico core inflation higher than expected in early Nov, rate hikes to continue

Mexico core inflation higher than expected in early Nov, rate hikes to continue By Reuters

Breaking News


Economy 8 minutes ago (Nov 24, 2022 10:30AM ET)

(C) Reuters. FILE PHOTO: A view of Mexico city’s skyline during a sunset October 17, 2011. REUTERS/Carlos Jasso (MEXICO – Tags: CITYSCAPE)/File Photo

By Gabriel Araujo

MEXICO CITY (Reuters) – Mexico’s annual consumer prices slowed more than expected during the first half of November, but the core inflation index – which remains a main concern in the country as it grapples with high costs – came in above market forecasts.

Data from national statistics agency INEGI showed on Thursday that annual headline inflation in Mexico hit 8.14% in the period, down from 8.53% a month ago and also below consensus of 8.24% in a Reuters poll of economists.

However, the closely watched core price index, which strips out some volatile food and energy prices and was recently dubbed “the greatest concern” by Bank of Mexico board member Jonathan Heath, continued to trend up, reaching 8.66% on an annual basis.

Economists polled by Reuters had expected it to come in at 8.60%, after hitting 8.39% in mid-October.

The latest inflation figures backed expectations that the local central bank, known as Banxico, would keep hiking interest rates.

“Overall, headline inflation continues to edge down in Mexico, but core inflation remains sticky, which will continue to keep policymakers uneasy,” said Pantheon Macroeconomics’ chief Latin America economist, Andres Abadia.

In a podcast published on Wednesday, Banxico’s Heath said the central bank was “not ready yet to decouple” from the U.S. Federal Reserve and that more rate hikes were needed to control inflation.

On a monthly basis, Mexico’s headline inflation rose 0.56% while the core index was up by 0.34% in mid-November, the statistics agency said. Economists had projected increases of 0.65% and 0.30%, respectively.

The fresh core inflation uptick is set to “strengthen the hand of the hawks at Banxico in the debate over how much more tightening to deliver,” said Jason Tuvey, senior emerging markets economist at Capital Economics.

Borrowing costs in Latin America’s second-largest economy currently stand at 10% after a monetary tightening cycle started in mid-2021.

Banxico is scheduled to release later on Thursday minutes of its most recent policy-setting meeting.

Economists at Grupo Financiero Banorte said they expect additional details on the conditions needed for Banxico to decouple from the Fed as well as the “appropriate” level for its terminal rate.

Latin American peer Brazil, where the tightening cycle has already came to an end, also released inflation data on Thursday. Consumer prices there increased 0.53% in the month to mid-November.

Mexico core inflation higher than expected in early Nov, rate hikes to continue

Ireland’s Donohoe unopposed in bid for second term as Eurogroup ChiefBy Reuters – Nov 24, 2022

DUBLIN (Reuters) – Irish Finance Minister Paschal Donohoe is on course to be elected president of the Eurogroup in December for the second time after the group of euro zone…

Ghana at high risk of debt distress, finance minister saysBy Reuters – Nov 24, 2022

By Christian Akorlie and Cooper Inveen ACCRA (Reuters) – Ghana will freeze the hiring of public and civil servants and extend a moratorium on government car purchases and…

ECB’s Schnabel pushes back on smaller rate hikesBy Reuters – Nov 24, 2022

LONDON (Reuters) – European Central Bank board member Isabel Schnabel pushed back on Thursday against calls from many of her colleagues for smaller interest rate increases by the…

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning

(C) 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

About the author