Mexico inflation at 17-month low

According to INEGI, the inflation rate last March was lower than the previous month's 7.62% and was also the lowest since October 2021, when Mexico recorded an inflation index of 6.2%. However, inflation in Mexico is still higher than the target set by the Central Bank (Banxico) of 3% (+/-1%). The consumer price index (CPI) in Mexico in March 2023 increased by 0.27%, after increasing by 0.56% in the previous month, a level quite low compared to the majority of economic experts' predictions, and also lower than the same period in 2022, when the CPI increased by 0.99%.

According to statistics, core inflation (excluding items with volatile prices such as food and energy) in March 2023 also decreased to 8.09% compared to 8.29% in the previous month and 8.07% compared to economists' forecasts.

Central Bank of Mexico Deputy Governor Jonathan Heath said that good control of food prices was the main reason for the deceleration in inflation over the past two months. However, Mr. Jonathan Heath warned that the rising price trend of essential services will be a factor contributing to the country's inflation rate in the coming time.

With the target of controlling inflation at 3% (+/- 1%), since June 2021, Banxico has increased the base interest rate by 7.25%. The bank emphasized that Latin America's second largest economy is facing huge inflationary pressure, so it is very likely that the Central Bank will continue to raise interest rates.

Also on April 5, the leaders of 11 Latin American countries, including the two largest economies, Brazil and Mexico, announced a joint cooperation initiative to tackle soaring inflation. The initiative was announced after an online meeting chaired by Mexican President Andres Manuel Lopez Obrador, with the participation of the leaders of Brazil, Argentina, Belize, Bolivia, Chile, Colombia, Cuba, Honduras, Venezuela, Saint Vincent and the Grenadines.

According to President Obrador, the goal of this initiative is to help people increase access to "food and essential products at better prices", through steps such as removing import tariffs and other trade barriers. This initiative will prioritize "saving costs for the poorest and most vulnerable"./.

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