A vendor in the La Merced market in Mexico City. Andrea Murcia (CUARTOSCURO)
The escalation of prices in Mexico continues out of control.
During March, the National Consumer Price Index (INPC) accelerated again and stood at 7.45% according to the annual rate: the highest level since January 2001 —at that time it stood at 8.1%—, The National Institute of Statistics and Geography (Inegi) reported this Thursday.
The increase in the prices of domestic LP gas, low-octane gasoline, air transport, eggs and corn tortillas pushed this indicator up.
The result was slightly above market forecasts, which estimated a variation of 7.3%, according to the average of economic analysts.
Core inflation —which excludes products with high price volatility from its accounting and is what the Bank of Mexico takes into account when making its monetary policy decisions— registered an annual variation of 6.78%.
Within it, the prices of services accelerated and stood at 4.6%.
From February to March, inflation presented a variation of 0.99%, its highest level for an equal month since 1998, according to Inegi data.
The non-core balance, which includes products with high volatility in their prices, such as agricultural products or fuels, accelerated and stood at 9.45%.
The products that became more expensive from February to March were air transport with 41%, avocado with more than 13%, onion with 10% and LP gas with 7.8%.
By State, Yucatán registered the highest inflationary pressures, followed by Morelos and Tlaxcala.
Gabriela Siller, from Banco Base, points out that since inflation continues to show an upward trend, Grupo Financiero Base will revise upwards its inflation projection at the end of the year.
“During the second quarter, inflationary pressures in the non-core component are likely to decrease moderately, due to adjustments in electricity rates.
However, the latter is not enough to propitiate a change in the general inflation trend.
If the current inflationary pressures continue towards June, the inflation projection towards the end of the year could be revised upwards towards 8%”, she comments.
Mexico closed 2021 with the highest inflation rate in 21 years, 7.36%, due to the sustained increase in food and fuel prices.
Although in January of this year the rise in prices seemed to have given a respite with lower figures compared to previous months, the data for February have once again set off alarms within the country's economic and financial sector.
The increase in prices adds up to a year outside the objective set by the Bank of Mexico, which placed the indicator at 3%.
In its most recent quarterly report, the central bank acknowledges that despite the fact that it was anticipated that general inflation would decrease throughout 2022, as the effects of the pandemic were diluted, the possibility of new occurrences cannot be ruled out. shocks that push it up derived from the complex environment facing inflation as a result of the pandemic, which could be further deteriorated by the conflict between Russia and Ukraine.
Last March, the Bank of Mexico raised the interest rate to 6.5% in response to high inflation in the country.
The unanimous decision of the central bank for the increase of 50 basis points was caused by the accentuated environment of "uncertainty" and the increase in prices caused by the "geopolitical conflict", in reference to the war in Ukraine.
“The Governing Board evaluated the magnitude and diversity of the shocks that have affected inflation and its determinants, as well as the risk that medium- and long-term expectations and price formation are contaminated.
With this action, the monetary policy stance is adjusted to the trajectory required for inflation to converge to its 3% target within the forecast horizon,” the institution indicated at the time.
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