Mexico's fruit and vegetable price spike provokes inflation rise

Mexico's inflation rate climbed to 4.76% in October from 4.58% in September, primarily due to a spike in fruit and vegetable prices, according to the national statistics agency, INEGI.

This uptick marks a reversal in the prior two-month trend of declining inflation.

Core inflation, which excludes volatile food and energy prices, continued its downward trend, reaching 3.80% for the 21st consecutive month. This trend could impact upcoming decisions from the Bank of Mexico (Banxico) as it considers future interest rate cuts. Banxico has already lowered its rate three times this year, bringing it to 10.50%.

INEGI’s report highlights a significant 15.90% year-over-year increase in fruit and vegetable prices in October, the highest since July, largely due to weather conditions. Additionally, service prices increased by 4.98%, and energy costs went up by 4.62%, affected by the end of summer electricity subsidies.

Looking ahead, Pantheon Macroeconomics forecasts a possible inflation decline by late 2024, due to improved supply chains and favorable climate conditions, aligning with the 4.41% year-end inflation projection from analysts at Citibanamex, one of Mexico’s largest financial institutions.

source: mexiconewsdaily.com

photo: elsoldesanjuandelrio.com.mx