Price increases in Mexico will continue to accelerate until the end of 2023. This Thursday the National Consumer Price Index (INPC) was published, showing that the annual inflation rate was 4.46% in the first two weeks of December, reaching its highest level since September this year, according to data from the National Institute of Statistics and Geography (Inegi). In the first fifteen days, the INPC recorded an acceleration of 0.52%, the highest rate in two weeks since the end of 2021 and the third period of upward acceleration.
Historically, year-end prices in the country accelerate every year, but this year they exceeded economists' forecasts. The latest Citibanamex survey predicted inflation at 4.3%. “The consensus is that annual general inflation will remain virtually unchanged in December,” analysts said a few days ago.
However, it is the prices of food and services that are showing the greatest resistance to a slowdown. Core inflation, which determines the development of general inflation in the medium and long term, was at an annual rate of 5.19%, while at a bi-weekly rate it registered an increase of 0.46%. Within this index, food recorded an annual increase rate of 6.46%, while services recorded an increase of 5.40% over the same period. Both indexes are outside the Bank of Mexico's target of 3%, plus or minus one percentage point.
In its last monetary policy decision, the Bank of Mexico showed interest in these two indices. “The updated forecasts assume a more gradual decline in inflation in food goods and services. “For this reason, forecasts for overall and underlying inflation are being revised upwards for some quarters,” the central bank reported.
On the other hand, non-core inflation, which includes products with the most volatile prices and government-administered rates, stood at 2.28% on an annual basis, up from 0.68% in the first half of December.
The products that recorded the largest increase in December were air transport with an increase of 38.84%, onions with an increase of 35.86% and nopales with an increase of 20.49%. In contrast, serrano chili and carrot experienced a price decline with a decrease of 10.92 and 8.81%, respectively.
The biggest risk to Mexico's inflation through 2024 is the government's high budget deficit.
— Gabriela Siller Pagaza (@GabySillerP) December 21, 2023
Subscribe here Subscribe to the EL PAÍS México newsletter and receive all the important information on current events in this country