Inflation, the topic of the day

When inflation is a locomotive that runs endlessly and crushes everyone, few doubt the need for urgent and forceful measures by central banks.

But when we enter a phase like the one we apparently started, of moderation in the increases in consumer price indices and eventually some declines, that is when there are those who would like to see the monetary authority more moderate so as not to affect economic performance.

This morning we will have already known the United States Consumer Price Index. The market expected the inflationary deceleration to continue, although at the end of last month gasoline prices rebounded, which was corrected at the beginning of November, but the measurement corresponds to October.

In any case, it is clear that a downward trend in energy prices continues, which are highly influential in US inflation.

If inflation in the United States maintains this downward path and leaves behind the historical peaks of past months, the Federal Reserve will be questioned about the need to maintain such aggressive increases in its interbank rate.

For now, today four out of 10 market participants still estimate an increase of 75 basis points for the monetary policy meeting on December 13 and 14. Of course, there are already a majority who see a half percentage point increase for the last decision of the year.

And in the case of Mexico, inflation is an issue because today there is talk of the Inegi report from last October and above all because today the Board of Governors of the Bank of Mexico will have to announce its decision on monetary policy and the consensus speaks of another 75 base points for the reference rate.

Of course, in Mexico the central bank will also begin to be questioned, even from within, for maintaining the aggressiveness of increases in the cost of money, when the general inflation rate shows an incipient downward trend.

At the time we discussed it, the first week of September marked a turning point in the National Consumer Price Index (INPC).

In fact, the general monthly inflation of last October is already in the average of the increases of the tenth month of previous years. But the red light is elsewhere.

It is worrying that core inflation will not find rest in its upward trajectory.

Despite the marked reduction in volatile prices in the economy, the prices that are at the heart of inflation continue to rise.

Non-food merchandise and some services continue to “even” in their price increases and prevent the INPC truce from spreading to other prices, including wages.

Thus begins the time in which the central banks must continue with their intransigent attitude with the high inflationary levels that remain, but at the same time they will need firm voices that are heard when the demands arrive that the monetary policies are considered as a hindrance to the economic growth.

ecampos@eleconomista.mx