In January 2022, Mexico has experienced its worst January slope in two decades. Inflation has been located at an annual rate of 7.07%, according to data from the National Institute of Statistics and Geography (Inegi) published this Wednesday. For the beginning of the year, this is the highest level observed since January 2001 and is still higher than the Bank of Mexico’s target of 3%, which a year ago stood at 3.33% at an annual rate.
Core inflation, the one that the Bank of Mexico takes into account when making its monetary policy decisions, stood at an annual rate of 6.21%, its highest level since September 2001 and has accumulated 14 consecutive months of increases, something which was last seen between November 1994 and December 1995. Gabriela Siller, director of economic analysis at Banco Base, considers that this data could influence the central bank’s decision. “It is likely that the Bank of Mexico’s Governing Board will announce this Thursday an increase in its target interest rate by 50 basis points, to settle at 6%,” she explains.
Deputy Governor Gerardo Esquivel has opposed this policy on several occasions, considering that inflation is a transitory phenomenon. “This downward trend will continue in subsequent months as some level effects seen last year unravel. The most obvious will be that of gasoline, since its annual variation, although positive, will begin to decrease significantly”, he wrote a few weeks ago.
Additionally, the merchandise price index rose at an annual rate of 7.86%, mainly explained by food merchandise, which rose at an annual rate of 8.76%. Only the food merchandise component explained 59.3% of the monthly variation in prices of the underlying component.
The products with the highest price increase and that had the most impact on inflation in January were lemons, with 68.77%, low-octane gasoline with 1.68%, as well as the prices of lunch shops, inns, torterías and taquerías , with a monthly increase of 1.61%. For its part, electricity rose 0.43% and domestic natural gas 0.23%. Regarding the rates authorized by the Mexican Government, the variation is mainly due to the change of year, with vehicle procedures rising 5.64% per month, document issuance 3.84 and water supply rights with an increase of 2 ,twenty%.
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