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Mexico’s gas and food costs rise in the first half of January

Last updated on January 25, 2021

Mexico City, Mexico — Mexico’s consumer price index rises 3.33 percent at an annual rate during the first half of January, raising doubts that Banxico will cut its interest rate next month.

Low-octane gasoline and domestic LP gas, as well as produce, were the ones that had the highest price increase in the first half of January.

Inflation in Mexico accelerated more than expected during the first half of January due to an increase in the prices of energy and some foods, reducing expectations of a drop in the benchmark interest rate in February.

The National Institute of Statistics and Geography (INEGI) said the country’s consumer price index rose 3.33 percent as of the first half of January, compared to 3.08 percent in the second half of December, and above the 3.17 percent projected by 12 analysts in a Reuters poll.

Core inflation, considered a better parameter to measure the trajectory of prices because it eliminates some highly volatile products, rose 3.83 percent, also more than the 3.78 percent expected by the market.

A recent survey published by Citibanamex anticipated that the central bank would resume its cycle of monetary easing and cut its key rate by 25 basis points in February.

Banco de México maintained its reference rate at 4.25 percent in December, and said that the “pause” in its cycle of cuts provided the space to confirm a convergent path of inflation towards its permanent target of 3 percent +/- one percentage point.

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