Inflation in Mexico begins to subside and stands at 7.62% in February

The general increase in prices in Mexico has begun to relax.

At the end of February, the inflation rate slowed to settle at 7.62% at the annual rate, a decrease from the figure of 7.91% registered in January 2023, according to data from the National Consumer Price Index that has published the Inegi this Thursday.

Although the data is encouraging, there are differences within the price components in the country.

Core inflation, which does not take into account fresh food or energy due to their volatility and which determines the path of inflation in the medium and long term, was a determining factor in 82% of monthly inflation in February.

Thus, the core component stood at 0.61% at a monthly rate as inflationary pressures in the merchandise component decreased, which allowed core inflation to settle at an annual rate of 8.29%, the lowest since September 2022.

The price of basic basket food continues to squeeze the pockets of Mexicans.

The merchandise index, which includes the price of food, stood at 10.65%, its lowest level since August 2022, but still well above overall inflation.

"Inflationary pressures from the services component persist, whose monthly inflation stood at 0.56%, the highest for a similar month since 2013," explains Gabriela Siller, director of economic analysis at Grupo Base.

Some of the basic basket products that showed the most increases, according to the Inegi, were eggs, with a rise of 9.04% in the last month, domestic LP gas, with an increase of 4.06%, and chicken with 3 .77%

In contrast, other products fell in price, such as tomato and serrano pepper with decreases of 18.54% and 20.18% respectively.

Additionally, the non-core index had an advance of 0.40% in the last month and was located at 5.56% in February, its lowest level in 24 months.

"Although it is good news, the decrease in general inflation in February should be taken with caution, since merchandise inflation continues at high levels and the increases at the monthly rate continue above what was observed in previous years, the pressures on services continue , taking the annual rate to its highest level since 2013 and that the prices of livestock products have risen at a rate above the average of previous years”, indicates Siller

For economists, inflation shows mixed signals and there is still no evidence of a clear downward trend. The inflation projection towards the end of the year remains unchanged in a range between 5.10% and 5.50% to finish year.

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