Mexican inflation reaches 17-year high on the first half of August

Inflation in Mexico reached a 17-year high of 6.59% through the first half of August, according to the National Institute of Statistics and Geography (Inegi). The figure took by surprise officials at financial institutions across the country as well as the international banking community. 

Increases in domestic gas prices, tomatoes, onions, green tomatoes, eggs, other cooked foods and university and high school tuition, however, seem to have triggered a spike in prices, according to the Inegi. That is the highest inflation rate since 2000, when it reached 8.99%, the Inegi said in a statement.

Mexico’s central bank, whose officials predicted an annual inflation around 6% for the coming months, warned that inflation risks have not improved since its last monetary policy decision, and vowed to ensure that a “prudent” stance is maintained on interest rate setting. 

“The majority (of board members) considered that the balance of risks to inflation had not changed compared to the previous statement,” the bank said in the minutes of the central bank’s latest monetary policy decision earlier this month, when it held its benchmark interest rate at 7.00%. 

The Board of Governors added that “it will closely monitor the evolution of all determinants of inflation, especially the potential transfer of exchange rate changes to prices, as well as the evolution of the output gap.”

They also said that they will evaluate the relative position of Mexican and US currencies, and added that the lower perception of extreme risks has contributed to improving the risk balance for growth.

MexicoNow

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