Mexico’s inflation seen easing

The National Institute of Statistics and Geography of Mexico will release inflation data for November on Thursday.

A recent Reuters poll revealed that headline inflation could have slowed down more in November. The Bank of Mexico (Banxico) may be poised to adopt a less aggressive monetary policy stance at its December 15 meeting on upbeat inflation data.

According to the median taken from 14 analysts' forecasts, annual inflation could have eased from 8.41% in October to 7.93% in November, down from a 22-year high of 8.70% registered in September and August.

Analysts see Mexico’s headline inflation slowing its pace during the period of pre-Christmas sales and discounts.

At the same time, they believe that core inflation, which excludes volatile food and fuel costs, could have hit 8.58%, its highest level since August 2000. Banxico is still struggling with its main concern — rising core inflation. 

Mexico's inflation target range is 3% +/- 1%. The Mexican central bank has already hiked its key interest rate by 600 basis points since it began to tighten monetary policy in June 2021.  The current rate is at 10%.

Analysts expect the regulator to slow the pace of rate hikes to 50 basis points at the Dec. 15 meeting after it enacted four consecutive 75-basis-point interest rate hikes.