General inflation in Mexico would have rebounded in December

The inflation general of Mexico It would have accelerated in December after two consecutive months of decline, a Reuters poll showed on Friday, a factor that maintains expectations about the restrictive tone of monetary policy carried out by the central bank.

The median of the projections of 11 participants yielded a year-on-year rate of 7.85% for the National consumer price index (INPC), above the 7.80% of November, but well below the record of 8.70% that had reached until August and September.

The relative deterioration of the year-on-year inflation outlook in December was largely attributed by economists to an increase in the prices of food merchandise and carbonated beverages. Meanwhile, energy prices would have helped contain upward pressure on the index.

“Although inflation will not have the scandalous levels that we observed during the summer, it will continue at levels that are incompatible with the objective of Banco de México,” said Marcos Arias, an analyst with the financial group Monex.

On the other hand, core inflation, considered a better parameter to measure the trajectory of prices because it excludes highly volatile items, would have slowed down to 8.35% year-on-year, from the 8.51% seen in November, when it reached its highest level in two decades.

Since its cycle of increases began in 2021, Banco de México has raised the funding rate by a total of 650 basis points. Although the last increase marked a slower pace than on previous occasions, the entity has warned that at least one more increase will still be necessary to control inflation.

Only in December, consumer prices would have grown by 0.42% compared to the previous month, while an increase of 0.65% is expected for the underlying index, according to the survey.

The national statistics institute, Inegi, will disclose on Monday the behavior of the price index during the last month of 2022.