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Inflation in Mexico accelerates to 7.99% during June, putting pressure on food prices

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 Inflation would reach 8.1% in the III Quarter; convergence to 3% in 2024

During June 2022, the year-on-year inflation rate it stood at 7.99% nationwide. This implied an acceleration of 0.84% ​​compared to May, reported the National Institute of Statistics and Geography (Inegi). The data reported by the Inegi is the highest for 21 years.

The data is greater than price increase that was presented in May, of 7.65% at annual rate; likewise, it was above what was expected by the market given that it was estimated at 7.96%, according to the analysts consulted by the Citibanamex Survey of Expectations.

With the data for June, inflation has been outside the target of 3% +/-1 percentage point of the Bank of Mexico for 15 months (Banxico). And eight months in the 7 percent range.

Two weeks ago, the governing board of Banco de México followed the line of the United States Federal Reserve (Fed) and increased your interest rate by 75 points base, to leave it at a level of 7.75 percent.

This is the first time, since the central bank adopted the target of inflation of 3% +/-1 percentage point, which is an increase of that magnitude, and with this decision they add nine consecutive increases in Banxico’s interest rate.

The decision, according to the Bank of Mexico statement, was made unanimously when considering the magnitude and diversity of shocks that have affected inflation.

The central bank has forecast that inflation could reach 8.1% annually, at the end of the third quarter and end 2022 at 7.5 percent.

Underlying inflation

The Inegi reported that underlying inflation, in which Banxico sets itself for its monetary policy decision and which eliminates goods and services with more volatile prices from its calculation, registered an annual 7.49% in June, which represented an acceleration of 0.77 % compared to May.

Inegi data revealed that the Underlying inflation registered in June 19 consecutive months with increases. And three months in a row in the 7 percent range.

Within the subjacent inflation, the goods registered 9.91% annual, this represented a monthly acceleration of 1.00 percent. Within this branch, food, beverages and tobacco registered 11.84% per year.

Meanwhile, services stood at 4.76% annually and thus showed a monthly acceleration of 0.50 percent. Within the branch, other services registered 6.61% at the annual rate, which showed a monthly acceleration of 0.73 percent.

Non-core inflation

At the same time, the Inegi reported that the non-core inflation it stood at 9.47% annually in June, which is an acceleration of 1.07% compared to May.

Agricultural products put pressure on non-core inflation since they registered 15.02% in June, which is an acceleration of 1.76% compared to May

Within the sector, energetic and rates authorized by the government registered an annual inflation of 5.22%, this is an acceleration of 0.49% compared to the previous month.



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