Mexico’s headline inflation accelerated in January in line with expectations, although the underlying index continued to moderate, reinforcing expectations that the central bank would cut the key interest rate in the coming months.
The National Consumer Price Index (INPC) stood at 4.88 percent, as expected and having been on the rise for three consecutive months, after having reached its lowest level since February 2021, according to figures released on Thursday. by the statistics institute, INEGI.
On the other hand, core inflation, considered a better parameter to measure the trajectory of prices because it eliminates highly volatile products, fell to 4.76 percent, its lowest level since July 2021.
At the end of last year, Banco de México – which has an inflation goal of 3% – maintained its reference rate at 11.25%, a maximum record it has reached since March, but in its monetary policy message it left open the possibility of an upcoming cut, even though he acknowledged that the inflationary outlook continued to pose challenges.
Although the market does not anticipate a reduction in its rate announcement later in the day, a survey among economic specialists carried out by the financial group Citibanamex revealed this week that a first reduction in the cost of credit is expected for March.
“With inflation on the rise, Banco de México is expected to show a little more caution to initiate interest rate cuts,” said Gabriela Siller, head of analysis at the firm Banco Base. “In today’s announcement it is possible that they will slightly change the forward-looking guidance, given the rebound in inflation,” she added.
In January alone, prices increased 0.89% compared to the previous month, while the underlying index showed a rate of 0.40%, INEGI said. MXINFL=ECI, MXCPIX=ECI
The products that suffered the most increases in the month were tomatoes and onions, while air transport and eggs were the ones that decreased the most.