Inflation in Mexico tightened the pockets of Mexicans more strongly in August , which reinforces expectations that the Bank of Mexico (Banxico) will raise its reference interest rate this month.
Prices grew at an average annual rate of 8.67%, their highest level since December 2000 and already more than double the central bank’s target range of 3% +/- one percentage point.
A Reuters poll indicates that the median of 16 estimates gave a rate of 8.67%. The indicator would be above the annual 8.15% in which it was located in July, according to data from the National Institute of Statistics and Geography (Inegi).
For core inflation, considered a better parameter to measure the trajectory of prices because it eliminates high volatility products, the sample anticipates a rate of 8.04%.
Only in the eighth month of the year, prices would have increased by 0.66%, according to the survey, while for the underlying index the median of the projections showed 0.78%.
While it seems that inflation will not give rest to Mexicans and their pockets, it decreased in August, particularly the possibility of acquiring durable and semi-durable goods.
Earlier this Monday, President Andrés Manuel López Obrador announced that he will meet with the Economic Cabinet to reinforce the plan against inflation (PACIC).
slowdown without recession
The deputy governor of Banxico, Jonathan Heath, pointed out this Monday that a complicated 2023 is expected with an economic slowdown, but without a recession materializing in Mexico.
“Not necessarily next year there is a recession scenario in sight, but we have to take care of ourselves quite well; in the United States, I think it is 50/50, but they are going to have to solve this problem of inflation, first”, he advanced in a videoconference organized by the Mexican Institute for Competitiveness (Imco).
The deputy governor added that “the best contribution that we, as a central bank, can make to a process of economic growth is to create an environment of stability, in which there can be more investment, more growth, a better allocation of resources.”
He explained that, in order to solve the problem of inflation in Mexico, which is a global issue, the origin of the problem must be solved, which means rebuilding the input supply chains.
What has to be done, he pointed out, is to have a monetary policy consistent with a high inflation scenario, as well as contain the price of gasoline, something that, although it will not solve the problem, will limit it.
With information from Jose Avila
