Annual inflation would not fall further: analysts

In the first fortnight of October, the National Consumer Price Index (INPC) registered a variation of 0.24% compared to the previous fortnight, and with this, the annual general inflation stood at 4.27%, which linked 11 fortnights to the low and marked a minimum since March 2021.

According to National Institute of Statistics and Geography (Inegi), the product that had the greatest impact on the price reduction during the first two weeks of October was tomato with a decrease of 9.67%, Chicken followed with a decrease of 3.28%, while onion became cheaper by 7.33 percent.

Alejandro Padilla Santana, deputy general director of Economic and Financial Analysis at Banorte, highlighted that general inflation reached its lowest point in the year.

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Going forward, a more complicated outlook awaits us both in terms of the bases of comparison and the current conditions.”

Marco Daniel Arias, analyst at Grupo Financiero Monex, agreed that the outlook for general year-on-year inflation remains rocky going forward.

Energy prices will continue to pressure and the possibility of a rebound in agriculture for the next fortnights is not minor. In this way, although today's data benefits from a stroke of luck, it is most likely that inflation will rebound towards the end of the year,” he warned.

Specifically, he said, he expects price growth to fluctuate around 4.5% over the next 10 months. which will leave little room for comfort on the monetary policy front.

For its part, Alejandro Saldaña, chief economist at Grupo Financiero Ve por Más (Bx+), projected that, due to a less favorable comparative base and higher oil prices, year-on-year inflation will accelerate slightly at the end of the year. to resume its downward trend starting in the first quarter of 2024.

PRESSURES

Although the rate of annual inflation has acceleratedsome products, especially food, maintain high rates that affect the pockets of Mexican families.

Such is the case of lemon, which has experienced an annual inflation of 84.4%, followed by carrots with 61.1%, poblano peppers with 40.5%, sugar with 38.3% and serrano peppers with 19.9 percent.

MONETARY POLITICS

Derived from the reluctance to decrease in some components, Annual general inflation will return to Banxico's tolerance range, which is 3.00% +/- one percentage point until the first quarter of 2025.

Today's data was somewhat below our forecast. However, considering that, in its last monetary policy announcement, Banxico reiterated that it is necessary to maintain the target rate at its current level for a prolonged period, we estimate that the benchmark will not begin to decrease until the first quarter of 2024,” said Saldaña. .

Padilla explained that the minutes of the last meeting maintained a tone hawkishwith relevant comments regarding inflation that suggest greater concerns.

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