Prices slow, but processed food does not budge

In the first half of November, general inflation moderated to 8.14% at the annual rate, from 8.28% in the previous fortnight, according to data from the Inegi.

The products with the greatest decreases were agricultural: onion (13.02%), green tomato (9.26%), the cantaloupe (8.70%), the pumpkin (7.93%) and the orange (5.11%).

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However, the underlying component reached 8.66% annually, the highest level since the second half of August 2000.

The Underlying inflation it excludes goods and services whose prices are more volatile, such as agricultural or energy, and is more useful for tracing the trajectory of general inflation, which is why Banxico pays special attention to it for its monetary policy decisions. Inside, the pressure remained on processed foods, beverages and tobacco.

Infographic: Juan Ángel Espinosa

The task of the central bank “is not finished in the sense of cooling the economy,” he said Ramse Gutierrez, co-director of Investments in Franklin Templeton Mexico.

He pointed out that the entity will be able to “let its guard down” and will have to continue raising its reference rate in the following decisions, at least until inflation approaches 4%, the upper limit set by Banxico.

James Salazar, deputy director of Economic Analysis at CI Banco, recalled that low financial inclusion in Mexico delays the effects that Banxico seeks rate hikes to control inflation.

“There is always a lagging effect on the part of monetary policy, and in countries like Mexico it is more noticeable because there is not a strong financial inclusion, so the adjustment mechanism for which it works Bank of Mexico which is through the interest rate, well it does work, but it will be slow because most do not have access to financial services,” he said.

Inflation spun five fortnights with decelerations at the annual rate, but the Inegi data is not perceived by consumers.

Ricardo Martínez, a food delivery man, said that food prices have not gone down in recent weeks. Meanwhile, Juan Pérez, a taco maker in the Anzures neighborhood, commented that the prices of the supplies he uses to prepare the tacos have increased by approximately 20% in the last year, but he dares to raise prices for fear of losing customers. .

“If I raise the price, people don’t come anymore and it turns out worse because I no longer have customers. I’d rather have little profit than lose clientele,” she stated.

Monex pointed out that during the two fortnights of October, the multiples of the underlying component were 2.2 and 2.1 times, “which could suggest that the pressures are on the rise and although the second half of November also usually offers discreet figures, the risk that the indicator shoots up during December, which averages 0.46% only in its first fortnight, is quite real”.

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