Monday, May 29, 2023

Banksico should raise its reference rate from 18.25% to 18.50%

Headline inflation in Mexico fell to an annualized 6.25% in April, compared to 6.85% registered in March. Our country ranks ninth in terms of inflation within the Group of 20, which is made up of the world’s 19 largest economies and the European Union.

The following countries have higher inflation than Mexico (inflation for each is shown in parentheses): Argentina (104%), Turkey (43.68%), United Kingdom (10.1%), Italy (8.3%), Germany (7.2%) ) , South Africa (7.1%), Australia and the Eurozone (7.0% each).

In contrast, these countries have low inflation: France (5.9%), India (5.66%), United States (4.9%), Brazil (4.65%), Indonesia (4.33%), Canada (4.3%), Korea ( 3.7 %), Russia (3.5%), Japan (3.2%), Saudi Arabia (2.7%) and China (0.1%).

Inflation in Mexico remains well above the target range established by the Bank of Mexico, between 2.0% and 4.0%. Also, the headline inflation of 6.25% does not fully reflect the reality of price rise.

Although prices rose at a slower rate in most categories of the Consumer Price Index (CPI) prepared by INEGI in April, they continue to affect most of the population. Price increases were as follows: restaurants and hotels (11.31% vs. 11.58% in March); food and non-alcoholic beverages (10.05% vs. 11.04%); miscellaneous goods and services, such as personal care products and services, watches, accessories, automobile insurance, funeral and professional services, other (9.89% vs. 10.25%); alcoholic beverages and tobacco (8.88% versus 9.19%); household furniture and appliances (6.67% vs. 7.15%); health services (6.42% vs. 6.53%); and clothing and footwear (5.60% versus 5.78%).

The percentage of income that a poor Mexican spends on food and other basic services varies according to various factors, such as the region of the country in which they live, inflation for that particular region, cost of living, family Income and other priority expenses.

According to data from the National Council for the Evaluation of Social Development Policy of Mexico (Coneval), in 2020 about 53.4 million people, i.e. 42.4% of the population, were in a state of poverty. According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), this figure is expected to rise to around 56 million in 2022 due to the global economic crisis.

in country.

In other words, more than 4 out of 10 people do not have easy access to a basic basket of food, healthcare, education and housing, among other essentials to satisfy.

General inflation in the last month is a far cry from the levels recorded between November 2021 and February this year, when the minimum was 7.4% and the maximum was 8.7%. Last April was the third month in a row that inflation declined, and it looks like it will continue to decline unless a catastrophic event occurs.

To ensure that this decline is sustained, Banksico’s governing board will be advised to raise the interbank interest rate from 11.25% to 11.5% at its meeting on 18 May.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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