Mexico: October annual inflation moderates to 4.26% compared to the expected 4.28%

• Inflation stands at 4.26% annually in October compared to the expected 4.28%
• Banxico will announce its decision on interest rates today, Thursday at 19:00 GMT.
• USD/MXN hits one-week highs at 17.60 minutes before the data and loses momentum after the release.

The Consumer Price Index (CPI) of Mexico has been placed in the 4.26% annual in October after registering 4.45% in September, as published by the National Institute of Statistics and Geography (INEGI). This figure slightly improves market expectations, since 4.28% was expected.

This is the ninth consecutive month in which Mexico’s inflation moderates. Furthermore, it has reached its lowest level since February 2021.

Monthly inflation has risen 0.38% compared to the previous month, compared to the 0.44% seen in September. Experts expected a rise of 0.39%. According to INEGI, at a monthly rate the prices of agricultural products fell by 2.09%, while those of energy and tariffs authorized by the government grew by 2.57%. This increase was a consequence, to a greater extent, of the conclusion of the subsidy to the summer season electricity rate program in 18 cities in the country where the IPC has coverage.

He underlying price index increased 0.39% at a monthly rate and 5.50% at annual rate.

Banxico is expected to keep its rates unchanged at 11.25%

The attention of operators now turns to the monetary policy decision of Banxico, Mexico’s central bank. It is expected that the entity will not change its interest rates of 11.25% for the fifth consecutive meeting.

The moderation of inflation favors the absence of new rate increases by Banxico, so clues will be sought in the statement about the possible start of a cycle of cuts.

USD/MXN Price Levels

The price of the Dollar has risen against the Mexican Peso in the minutes prior to the publication of Mexico’s CPI, reaching seven-day highs of 17.60. After the data, the USD/MXN has fallen slightly towards 17.55. At the time of writing, the pair is trading above 17.56, gaining 0.08% daily.