Inflation in Mexico climbs again and stands at 7.88% in June

A supermarket in Colonia Roma, in Mexico City. Nayeli Cruz

Inflation in Mexico does not give its arm to twist.

Despite the measures of the Government and the Bank of Mexico to try to contain the rise, the price index stood at 7.88% in the first half of June, its highest level since January 2001 and 0.49% more that in the previous fortnight, the National Institute of Statistics and Geography (Inegi) has revealed this Thursday.

Although fuels such as LP gas show reductions, the increase in food prices such as potatoes or oranges continues to push prices up.

The rise in the first half of June is due to the increase in the underlying price index, the one that includes products with lower volatility and the one that the Bank of Mexico takes into account to define its monetary policy.

This index stood at 7.47% per year, the highest level since December 2000. Within it, the increase in food and beverages stands out, with an increase of 11.7% per year.

Meanwhile, non-core inflation, which includes energy prices, stood at 9.13% per year, 0.49% more than in the previous fortnight.

Fuel prices, which hit their highest in more than a decade after the Russian invasion of Ukraine, stood at 5.8% annually, an increase of 0.18% from the previous fortnight.

By products, the potato was the one that registered the greatest increase, with a rise of 16.7% compared to the previous fortnight.

They are followed by orange, with 13.1%;

air transport, with 6.6%;

electricity, with 2.5%;

and chicken, with 2.2%.

On the other hand, LP gas, whose rising prices last year caused alarm in the Government, fell by 1.5% fortnightly.

The data for June has surprised analysts, who expected lower inflation.

"It shows that upward pressures continue to be strongly concentrated in the underlying component," says Gabriela Siller, from Banco Base.

The analyst also says that it is "likely" that the Bank of Mexico will raise its interest rate by 75 basis points for the first time this Thursday and that it will revise upwards its inflation projections for the coming months.

The US Federal Reserve, whose movements the Mexican central bank follows closely, voted for a similar hike at its meeting last week.

The Bank of Mexico has brought out the artillery to face the increase in prices.

In mid-May, he raised the interest rate by 50 basis points to 7%, the eighth consecutive increase.

"Global inflation continued to rise, pressured by bottlenecks, recovery in demand and high food and energy prices," the institution said in a statement.

In parallel, the Administration of Andrés Manuel López Obrador has tried to contain the increase in prices with different measures.

Fiscal incentives for the purchase of gasoline have prevented the increase in price from being even greater, although it can cost up to 400,000 million pesos to the treasury, according to the Tax Administration Service.

In addition, the Government negotiated with the main companies in the food sector to keep the price of 24 products in the basic basket stable.

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