The pressures that appeared in inflation, especially in the core item, are beginning to worry analysts about the impact on price formation, as it is possible that these pressures will continue into 2023.
Data from the National Institute of Statistics and Geography (Inegi) revealed that in the first half of September, core inflation was 8.27% annually from the data for the last two weeks of August by 8.13%. The acceleration is mainly attributed to the merchandise item, especially those referring to foodstuffs which have increased significantly in recent months.
In this way, the core, which removes from its account the most volatile goods and services that the Bank of Mexico (Banxico) considers for its monetary policy decision, has hit a level not seen since the first two weeks of September. 2000, when it was located at 8.39 percent.
We still see that core inflation this month could hit 8.33% and that would be the highest it could reach this year, but the truth is that the bearish revisions we expect for this component are very slight for the remainder of this year, which is concerning because the readings we see every two weeks It indicates that there is still a lot of pressure,” said Jessica Roldan, chief economist at Finamex.
In this sense, Monex analyst Marcos Daniel Arias noted that the food commodity component not only put pressure on core inflation, but also in the first two weeks of the national month there were increases in items such as education, personal care and clothing. , which may be related to pressures on the consumption side.
“The sum of these factors strengthens the notion that stresses are generalized and have different roots, and, in our view, distances themselves from the possibility of a transient phenomenon, as has been addressed on various occasions. Conversely, all these inflations in annual terms are equivalent to double-digit numbers and warn There is a significant risk if core inflation does not stabilize in the short term.”
Bancico will repeat the game
By Banxico, given continued inflationary pressures and moves by the US Federal Reserve, analysts expect a repeat of the 75 basis point dose not only in the following week, but also at the November meeting.
“(The current scenario) leaves very little room for Banquico not to follow the Fed for the rest of the year,” Roldan said, predicting two more quarter-point moves.