Inflation in Mexico has a downward trend with a faster pace of decline than estimated by financial sector analysts. For this reason, it is expected that in the coming months the indicator will continue with good downward momentum and close the year at a level of five percent, Citibanamex analysts said.
“Inflationary pressures continue to decrease in the second quarter of the year. Under this context, Mexico averaged an annual general inflation of six percent in the first two months of the second quarter, and in the first half of June it stood at 5.2 percent, a minimum since March 2021,” they said.
When presenting a study titled Examination of Mexico’s Economic Situation, Citibanamex economists noted that, overall, “the recent general inflation data remains a low trend, even in a faster pace than expected, mainly due to non-core inflation”.
They pointed out that “inflation has continued to decline in recent months,” as the overall index in April and May registered a monthly decrease of 0.02 and 0.22 percent, respectively.
The factors that contributed to the decrease in inflation were the decrease in energy prices due to the decrease in electricity prices due to the start of subsidies in the hot season in 18 cities and the decrease in the price of gas.
From the above, Citibanamex economists estimate that “the gradual improvement in the inflationary outlook will continue, with annual inflation on a downward trajectory. The above is due to the low inflation of imported goods, the appreciation of the peso and relatively stable non-core prices.
“Although upside risks remain, mainly due to domestic factors, we see our balance of inflationary risks biased downward. “We now estimate total and underlying inflation at five and 5.4 percent, respectively, for the end of 2023,” they said.
