Mexico Sees Lowest Inflation Rate Since February 2021
Mexico's inflation has shown signs of easing in the first half of September, reaching its lowest level in several months, according to the National Statistics Institute.
Inflation Figures
The consumer price index rose by 0.25% in the first two weeks of September, reflecting an increase of 4.44% compared to the same period last year. The previous month had a 12-month inflation rate of 4.64%.
Meanwhile, the core consumer price index, which excludes volatile prices of agricultural products and energy, slightly increased by 0.27% during the same period. Consequently, the annual rate decreased from 6.08% in August to 5.78%.
Bank of Mexico and Interest Rates
Despite the downward trend in inflation, the Bank of Mexico has not indicated any immediate plans to cut interest rates. It has kept its overnight interest-rate target steady at 11.25% for the past three meetings and anticipates maintaining this rate for an extended period.
In a note, Jason Tuvey, Deputy Chief Emerging Markets Economist at Capital Economics, expressed his view that the significant declines in Mexico's inflation rate are unlikely to continue and expects it to remain relatively stable over the next 9-12 months.
The Bank of Mexico has set a 3% inflation target.
Future Predictions
A recent poll conducted by Citibanamex, a unit of Citigroup, revealed that a majority of banks anticipate the Bank of Mexico to commence interest rate cuts in early 2024.
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