La Jornada: Inflation resists: 4.53% in the first half of April

General inflation in the first half of April was 4.53 percent annually due to the resumption of pressures generated by the prices of fruits and vegetables, as well as the increase in the prices of Premium gasoline and liquefied petroleum gas (LP), according to data from the National Institute of Statistics and Geography (Inegi).

The National Consumer Price Index (INPC) grew 0.11 percent in the first 15 days of April, exceeding the consensus estimate in the most recent Citi survey (0.8 percent); Thus, inflation at an annual rate moderated from 4.55 percent in the second half of March to 4.53 percent in the first 15 days of April, above the 4.5 percent expected by analysts.

Inflation in the first half of April linked two annual readings of moderation. However, consumer prices were four fortnights above the highest level of the Bank of Mexico’s stability objective (4 percent).

The pressures on agricultural products remained strong, as their inflation went from 7.85 percent annually in the second half of March to 8.69 percent in the first half of April, derived from an increase of 23.03 percent annually in fruits and vegetables, which contrasts with a decrease of 0.84 percent in livestock products.

Tomato, which rose 24.37 percent in the fortnight and 125.97 percent annually, was the product that rose the most, followed by the poblano chile, with an increase of 22.63 and 74.57 percent (biweekly and annual, respectively). The serrano chile rose 21.94 percent compared to the second half of March and 65.28 percent compared to the first 15 days of April last year. Other chilies, potatoes and onions also rose in price.

Livestock production had a decrease of 0.9 percent fortnightly, mainly due to the prices of chicken and eggs.

Energy prices fell 2.51 percent in the first half of April and rose 0.8 percent at an annual rate; Electricity fell 14 percent compared to the last two weeks of March, but rose 2.64 percent annually, due to the entry into force of the first tranche of summer discounts.

High octane gasoline (Premium) rose 2.97 percent biweekly and 9.66 percent in the last 12 months, while LP gas increased 0.48 percent in the fortnight.

Services fell 0.12 percent biweekly; In the “others” category, which fell 0.08 percent, tourism stands out after Easter, with a drop of 11.6 percent. However, the increases continued in loncherías, inns, cake shops and taquerias, with 0.28 percent fortnightly.

Upside risks

The underlying component, which represents around 76 percent of the INPC and determines the trajectory of inflation in the medium and long terms, moderated to a rate of 4.27 percent. Education rose 5.96 percent; other services, 5.09, and food and beverages, 5.41 percent.

“Despite the slight moderation of general inflation and the lower pressures of the underlying component, the balance of risks for inflation remains biased upwards. Given the rigidity that the underlying has shown, it is unlikely that in the following readings it will repeat the behavior of this fortnight, so it would remain above 4 percent annually. In the case of the non-core component, new pressures stand out in the agricultural sector, particularly fruits and vegetables (23.03 percent), which complicates the convergence of the general indicator towards the 3 percent goal,” explained Kevin Castro, economic analyst at Monex.

Given this scenario, analysts foresee a cut of 0.25 percentage points in the reference rate, which would drop to 6.5 percent, but they differ on whether this will occur on May 7 or June 25.