Although the current disinflation process represents a relief for the Bank of Mexico (Banxico), there is one component that remains reluctant to break its lateral trend: service prices.
The annual inflation rate in services accumulated 26 consecutive months above 5 percent, according to information published this Wednesday by the National Institute of Statistics (Inegi).
The last time this rate was below that rate was in July 2022, when it marked 4.90 percent. The annual rate of this component moderated last September to 5.10 percent, from a previous reading of 5.18 percent in August, supported by a slowdown in the prices of public services and transportation, according to the National Consumer Price Index (INPC).
“We still cannot speak of a clear turning point in services,” Alejandro Saldaña, chief economist of Grupo Financiero Bx+, highlighted today in an analysis note.
Ernesto Rattia Lima, head of the central bank’s Salary Indicators office, stated this week during a Banxico Lecture at UNAM, that there is constant observation of the prices of services, since they have not responded in the same way as the others. components of the INPC despite the inflection in the supply and demand shocks that caused the rise in inflation after the pandemic. In the same sense, Jonathan Heath, deputy governor of Banxico, stated yesterday in a Banco Invex forum that service prices still show some reluctance because the slack in the economy is not so pronounced and also because of the negotiating power with the that certain providers have. For this reason, Heath highlighted the importance of adopting a cautious monetary policy stance in the fight against inflation. At a monthly rate, prices in services resumed their upward trend in September, advancing 0.35 percent, after slowing to 0.27 percent last month. Within the services, the annual increases stood out in the generic that covers loncherías, inns, cake shops and taquerias from 7.76 in August to 7.92 in September, as well as restaurants and similar, whose inflation rate accelerated from 5.89 to 6.08 per cent. annual cent. Within Banxico, although they recognize progress in their fight against inflation, they have stated that they remain vigilant about the resistance presented by services. Yesterday, Inegi reported that general inflation in September was 4.58 percent annually and 0.05 monthly. This rate gives Banxico euphoria for a new cut, commented Alfredo Coutiño, director for Latin America at Moody’s Analytics.
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