What products are still impacted by high inflation in Mexico?

Headline inflation in Mexico declined for a second consecutive month in September, beating analysts’ expectations to come in at an annual rate of 4.58%.

The national statistics agency INEGI reported on Wednesday that the annual headline rate declined from a 4.99% reading in August.

The rate — the lowest since a 4.42% reading in March — was just below the 4.62% consensus forecast of analysts surveyed by Citibanamex and the 4.61% prediction of analysts surveyed by Bloomberg.

INEGI said that the National Consumer Price Index ticked up 0.05% in September compared to August.

The annual core inflation rate, which excludes volatile food and energy prices, fell for a 20th consecutive month to reach 3.91% in September.

Although the headline rate remains above the Bank of Mexico’s target of 3% inflation give or take 1 percentage point, the decline for a second successive month increases the probability that the central bank’s benchmark interest rate will be lowered for a fourth time this year in November.

Alfredo Coutiño, head of Latin America Economic Research at Moody Analytics, said on X that the inflation rate in Mexico’s “patriotic month brought happiness to the Bank of Mexico” and provided “euphoria,” or impetus, for another cut to the central bank’s key interest rate after its monetary policy meeting on Nov. 14.

He predicted that “at least four of five” Bank of Mexico board members will vote in favor of an interest rate cut in November.

The central bank’s key interest rate is currently set at 10.50% after cuts of 25 basis points in March, August and September.

September inflation data in detail 

INEGI data shows that fruit and vegetables were 7.65% more expensive in September than a year earlier. While inflation for those products is still high, it has declined rapidly in the past two months after exceeding 23% in July.

Annual inflation for meat in September was 5.14%, while processed food, beverages and tobacco were 3.92% more expensive than in the same month of 2023.

Inflation for non-food goods was 1.69%, services were 5.10% more expensive and energy prices, including those for fuel and electricity, rose 6.01% compared to September 2023.

Other need-to-know economic data 

• The USD:MXN exchange rate was 19.40 shortly after 9:30 a.m. Mexico City time on Wednesday.
• Mexico’s economy grew 1.5% annually in the first six months of 2024.
• The bank BBVA is currently forecasting that the Mexican economy will grow 1.2% this year and 1% in 2025.
• Mexico’s unemployment rate was 3% in August, the highest level in a year.
• The value of Mexico’s exports to the United States increased 5.8% in the first eight months of the year to reach a record high of US $334.7 billion.

With reports from El Financiero, El Economista and Bloomberg