The minimal success of the fight against inflation

Last Wednesday, President Andrés Manuel López Obrador celebrated the fact that the National Consumer Price Index (INPC) fell slightly in October, as reported that same day by the National Institute of Statistics and Geography (INEGI).

“Yes, it went down, a little bit,” he said. “The important thing is that there is already a downward trend.”

As expected, he defended the decisions that his government has taken to combat inflation, such as the subsidy of 350 billion pesos for gasoline and diesel, the agreements with producers, distributors and food retailers, the cancellation of import tariffs and sanitary controls of certain imported foods.

Now, despite the fact that the INPC fell from 8.7% in September to 8.41% in October, the fact is that so far the success in combating inflation is minimal.

The INEGI also disclosed how the Underlying Index increased, which according to the same institute “is obtained by eliminating from the calculation of the INPC, the goods and services whose prices are more volatile, or that their determination process does not respond to conditions market (…) those that are excluded are agricultural, energy and tariffs authorized by different government orders”.

For economists, core inflation is the one that best allows us to see how prices will behave in the medium term, free of seasonality, high volatility or government decisions.

Thus, according to this index, things are not improving. In October it increased 8.41% annually, which is more than the increase of 8.28% registered in September and the 8.05% reached in August.

The increase in the prices of merchandise in August, September and October was 10.55%, 10.84% ​​and 11.15%, respectively.

The increase in the prices of food, beverages and tobacco was 12.94%, 13.38% and 13.95% in those same three months. And that of non-food merchandise was 7.9%, 8.0% and 8.03%.

Consumers must face price increases that seriously affect their ability to buy, let alone save some of their income.

In October, the annualized increase in the prices of (processed) food and non-alcoholic beverages was 14.54%, restaurants and hotels 12.26%, alcoholic beverages and tobacco 9.52%, furniture and household items 8.80% , transportation 7.86%, health services 6.10%, clothing and footwear 6.03%, and education services 4.48%. With this situation it is difficult to assume that most people have money left to spend on recreation and culture services, whose prices rose 5.54%.

For example, how does an employee who does not have the time to go home to do it or does not want to be carrying a lunch box manage to eat well every day in a restaurant, cafe or inn? You are only left with the option of the lunch box or risking your health by consuming junk street food.

The best example that experts do not see the “little progress” in the fight against inflation is the fact that yesterday the Bank of Mexico raised its leading rate from 9.25% to 10%, the fourth highest in the Group of 20 , behind those of Argentina (75.0%), Brazil (13.75%) and Turkey (10.05%).

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