Inflation eases in June, but not enough to rule out a slower rate-cut pace

Annual ostentation slowed successful June, though halfway prices remained stubbornly high, prompting speculation that the cardinal slope mightiness dilatory the gait of involvement complaint cuts.

According to information from Mexico’s nationalist statistic bureau INEGI, user prices roseate 4.32% successful June, down from 4.42% successful May, representing the first monthly diminution successful the yearly ostentation complaint since January. 

The ostentation study for June mentioned zucchini arsenic 1 of the vegetables whose prices lowered sine the past report. 
(Margarito Pérez Retana/Cuartoscuro)

Month-over-month ostentation successful June itself was .28%, down from .38% successful June of 2024.

However, yearly halfway ostentation accelerated to 4.24% successful June from 4.06% successful May, its highest level since April of 2024. Core prices are viewed arsenic a amended gauge of terms trends due to the fact that highly volatile nutrient and vigor prices are stripped out.

The latest halfway ostentation numbers airs a dilemma for the cardinal bank, oregon Banxico, with respect to borrowing costs for Mexico, according to the quality bureau Reuters.

“Core ostentation remains sticky, with persistent upward unit from housing, nutrient services and a seasonal leap successful airfares, apt keeping immoderate Banxico committee members uneasy,” Andres Abadia, main Latin America economist astatine Pantheon Macroeconomics, told Reuters.

Housing, food, carrot and beef prices led the emergence successful inflation, portion papaya, chile serrano, chile poblano, guava and zucchini prices fell the most, according to INEGI.

What’s successful store for July?

Analysts surveyed by Reuters expect July’s ostentation complaint to descend beneath 4%, wrong scope of the precocious extremity of Banxico’s people scope of 3%, positive oregon minus 1 percent point.

Such an result would apt origin the cardinal slope to easiness its gait of complaint cuts. Banxico has shaved 50 ground points disconnected its benchmark complaint each of the past 4 months. 

“We expect that the Mexican cardinal slope could chopped its benchmark complaint connected 2 much occasions this year. We task that these cuts volition hap successful August and September, some cuts of 25 ground points,” analysts astatine the concern slope Actinver said.

Banxico lowered its benchmark complaint by 50 ground points past month, to its lowest complaint successful astir 3 years, though the determination was not unanimous. Jonathan Heath, the lone antagonistic ballot astatine past month’s Board of Governors meeting, has urged a much cautious attack until a much sustained downward trajectory successful the ostentation complaint is evident.

Notes from the June 26 gathering suggest the remaining Banxico governors hold with Heath, eliminating references to further 50 ground constituent cuts. Instead, they said they would proceed to measure the situation. 

With reports from El Economista, El Financiero and Reuters