Inflation grows in July

Business

By CAPosts 08 August, 2020 - 05:00am 52 views

© dineroenimagen.com Source: Inegi / Photo: Jesús Sánchez

CITY OF MEXICO.

Durante July the National Consumer Price Index (INPC) recorded a 0.66% increase over the previous month, with it annual inflation stood at 3.62%, its highest level in five months, reported by the National Institute of Statistics and Geography (Inegi).

With this result the indicator accumulated 14 months within the target range of the Bank of Mexico (Banxico), which is 3.0% +/- one percentage point, which, according to experts, gives the central bank room for manoeuvre to further cut the benchmark rate, which currently stands at 5.00 percent.

The inflation landscape keeps the window open for the central bank to continue the easinness. Specifically, we anticipate a further cut this year from 50 basis points to bring the rate to 4.50%," said Alejandro Padilla, Executive Director of Economic Analysis and Financial Market Strategy at Banorte.

Regarding general inflation, it anticipated that it will remain within the central bank's tolerance range, closing the year at 3.40 percent. "The outlook is still highly uncertain. The magnitude of the contraction in economic activity and demand weighs negatively on prices. However, in the face of the effects of exchange rate depreciation and disruption in the supply of goods and services, among others, underlying inflation has been reluctant to fall, even some of its components have been pushed upwards. In addition, energy and agricultural prices could continue to exhibit high volatility."

The body chaired by Julio Santaella indicated that the underlying inflation, which does not take into account products with high volatility in its prices, grew by 0.40% per month, bringing it to 3.85% at an annual rate. Meanwhile, non-core inflation, a component that counts high price volatility products such as energy and agriculture, recorded a 1.48% monthly and 2.92% annual hike.

In the underlying price index, goods rose 0.64% and service prices increased 0.13% monthly. Within the non-underlying price index, agricultural products went back 0.03% per month.

  PRICE BUTTON

The products with the highest incidence of inflation during the seventh month of the year were low-octane gasoline, with a rise of 5.64 per cent; chicken, at 5.60 percent, and domestic lp gas, with a 2.33 percent advance.

The products that had decreases in their costs to the public and that had the most impact on inflation were serrano chili, with a reduction of 29.20%; egg, down 3.36 per cent; and the tomato, with a low of 4.48 percent.

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