Mexico | May inflation forecast: temporary jump in inflation

Summary

We expect headline inflation to increase 0.58% MoM in May, thereby accelerating to 3.04% YoY from 2.15% in April. We anticipate a 0.36% MoM core inflation increase (3.71% YoY, up from 3.50% in April).

Key points

• Key points:
• Within core inflation, there are two different trends, with all components easing or remaining well behaved, but continued pressures on core food prices
• Inflation is not and will not be a problem for monetary policy with plummeting demand, a rapidly widening negative output gap, increasing labor market slack, and the recent strengthening of the Mexican peso
• We continue to expect Banxico to cut rates much more than currently expected, until real rates are close to 0%

Geographies

Topics

Tags