The national statistics agency INEGI has noted an uptick in Mexico's headline inflation rate for October, as fruit and vegetable prices have surged, marking an end to the previous two-month trend of declining annual rates. As per INEGI, the inflation rate escalated to 4.76% in October, up from September's 4.58%, slightly surpassing the 4.73% forecast by analysts surveyed by Citibanamex. This development occurs as the Bank of Mexico (Banxico) closely monitors inflation dynamics ahead of an anticipated interest rate decision.
Despite the overall increase, the annual core inflation rate, which filters out volatile food and energy prices, recorded a 21st consecutive month of decline, settling at 3.80%. This trend in core inflation is expected to influence Banxico's forthcoming monetary policy decisions, potentially leading to another rate cut, as suggested by Bloomberg. Previously, Banxico has adjusted its key rate downwards three times this year, cumulatively reducing borrowing costs by 75 basis points, with the latest cut bringing the benchmark rate to 10.50%.
INEGI's report highlights a significant 15.90% year-over-year price increase for fruits and vegetables in October, the highest since July, and a notable rise from September. This spike is attributed to varying weather conditions affecting produce prices. Additionally, October saw meat prices rise by 6.17% annually, contributing to an overall 10.92% increase in agricultural product prices, which includes fruits, vegetables, and meat. The report also notes a 4.98% inflation rate for services and a 4.62% increase in energy prices, driven by the cessation of summertime electricity subsidies in several cities.
Looking ahead, Andrés Abadía, chief Latin America economist at Pantheon Macroeconomics, forecasts a potential decrease in inflation rates in the final quarter of 2024, citing factors such as improved supply chain conditions and favorable climate patterns. This outlook is echoed by the median projection of Citibanamex's surveyed analysts, who anticipate a year-end headline inflation rate of 4.41% for Mexico.
Source: Mexico News