- Inflation surprised to the downside at 0.04% 2w/2w, driven by discounts from Mexico’s Black Friday, gasoline and fruits
- With this, the headline index stood at 3.43% y/y, below the 4.09% in October and back within Banxico’s target range
- Attention will turn to Banxico’s QR and minutes, providing valuable information about the policy path ahead
Headline inflation (1H-Nov): 0.04% 2w/2w; Banorte: 0.22%; consensus: 0.23% (range of estimates: 0.12% to 0.71%); previous: 0.16%
Core inflation (1H-Nov): -0.11% 2w/2w; Banorte: -0.03%; consensus: 0.09% (range of estimates: -0.03% to 0.19%); previous: 0.07%
The final reversal of summer discounts in electricity tariffs was observed this period, up 22.7% 2w/2w, adding 39bps to the headline. Other components within the non-core were more positive, with fresh fruits and vegetables down 3.3% and low-grade gasoline falling 3.2%. The core was also below market consensus, with goods (-0.3%) benefited by the extended discounts period of El Buen Fin.
Annual inflation fell to 3.43% from 4.09% in October, below the upper bound of Banxico’s variability range for the first time since August. This was helped by a more benign base effect at the non-core, which fell to 2.67% from 4.42%. Core inflation also declined, to 3.68% from 3.98%.
Along with this report, we will focus on Banxico’s Quarterly Report tomorrow and the latest minutes on Thursday, which in our view could provide further valuable information about the policy path ahead.
We expect a further breather in Mbonos and additional compression in inflation breakevens.
- 1 Macro Analysis/Nigeria Nigeria in 2021: Navigating murky waters
- 2 Fixed Income Analysis/Sudan Sudan: HIPC debt relief to offer upside on defaulted paper
- 3 Strategy Note/India India: 7 charts to mark 72nd Republic Day
- 4 Weekend Reading/Rwanda No, I would no longer rather be back in Africa
- 5 Strategy Note/China SPAC mania drives up valuations in Asia