Mexico records inflation of 0.59% in July and 5.81% in 12 months

RIO DE JANEIRO, BRAZIL – In July, inflation in Mexico was 0.59%, which accumulates 5.81% in 12 months, due to the increase in prices of energy products and some foods, informed Monday the national statistics institute, INEGI.

The annual figure is lower than the 5.88% recorded in June, although it remained above the inflation target of the Bank of Mexico (Banxico, central) of 3% per year (+/- one percentage point).

On June 24, the central bank decided to raise its reference rate by 25 basis points to 4.25% in the face of increased inflationary pressures.

That decision broke with the cycle of rate cuts that the Bank of Mexico initiated in August 2019 and extended through 2020 as the coronavirus pandemic hit the Mexican economy, the second-largest in Latin America after Brazil.

The institution raised the rate to recognize the increase in consumer prices and its impact on inflation expectations.

The next monetary policy decision is due this Thursday, August 12, when some analysts expect a new increase in the reference rate.

The Mexican economy plummeted 8.5% in 2020, dragged down by the effects of the pandemic. The government of President Andrés Manuel López Obrador and the central bank expect a rebound of between 6% and 6.5% this year.