MEXICO CITY (CN) — Inflation in Mexico jumped to 4.9% during the first 15 days of January, according to data released Wednesday by the National Institute of Statistics and Geography.
The figure marked a 0.49% increase compared to the same period in 2023 and was the fifth consecutive two-week period rise in inflation. It also marked the highest rate since 2021, surpassing Bank of Mexico's 3% forecast.
Tomatoes, dining out, onions, cigarettes, allergy medication and housing saw the biggest price increases, while the costs of airfare and tourism dropped.
The headline inflation is due to an uptick in non-core inflation, which rose to 5.24% from 4.49% at the same time the year before. This inflation measure includes volatile products and services that can easily be affected by short-term weather patterns that result in quick fluctuations in price.
Gabriela Siller Pagaza, director of economic and financial analysis at Banco BASE and an economics professor at Monterrey Institute of Technology and Higher Education, said economists saw the spike coming.
"This has made it evident that the annual risks of inflation in Mexico continue, even more so, seeing where it is going this year," she said.
Siller Pagaza said that some services, such as dining out, were affected by this year's increase in the minimum wage from 207.44 pesos (about $12) to 248.93 pesos (about $14.50) per day.
"This increase will surely push wage contracts higher, in addition, there are external risks that continue to increase such as transport costs that could continue the depreciation of the peso, which could also push inflation upwards," she said.
She added that Mexico's high budget deficit of 4.9%, the highest since 1988, will generate pressure on the aggregate demand, increasing inflation.
A report released Wednesday by Mexico's Grupo Financiero Banorte found "challenges persist for agricultural goods, with current and past adverse weather conditions in the last months weighing on crops."
"In this context, our call is that prices for these goods will remain under pressure at least in the short-term with the annual comparison for fruits and vegetables currently at 20.7%."
While headline inflation rose, core inflation came in line with predictions and continues to decrease.
Core inflation decreased to 4.78% from 4.98% the year before, its lowest level since August 2021. This rate does not include volatile products in the non-core category.
Despite the uptick in headline inflation, the Bank of Mexico is expected to cut interest rates in March.
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