Mexico recorded an uptick in its headline inflation rate in August, marking the first increase in five months, according to official figures published on Wednesday. The annual pace of consumer price growth in Latin America’s second-largest economy rose to 3.26% in the year through August, compared with a 3.12% year-on-year rate in July and slightly under the 3.3% forecast in a Reuters poll.
On a monthly basis, the data show that consumer prices rose 0.20% in June, following a 0.03% increase the prior month. Those monthly movements compared with economists’ expectations of a 0.25% rise.
Policymakers and markets watch the core inflation gauge closely because it removes some of the most volatile food and energy components. The core index increased 0.16% during the month, below market forecasts of 0.20% and marginally down from the 0.23% monthly rise recorded in the previous month. Measured on an annual basis, the core rate stood at 3.88% in August, easing from 3.95% in July and beneath expectations of a 3.93% increase.
Taken together, the headline acceleration in August and the softer monthly movement in core inflation present a mixed picture: headline inflation climbed after several months of moderation, while the underlying core trend showed a modest slowdown on both a monthly and annual basis. The official release noted these outcomes in a context that supports a cautious approach in the country’s monetary policy.
While the headline number exceeded the July reading, it remained just under the economists’ consensus. The divergence between the small monthly uptick in headline inflation and the deceleration in core annual inflation highlights why policymakers continue to monitor both sets of readings as they weigh the appropriate stance for interest rates.
Contextual note - The report comes from the official statistics for Mexico and summarizes the monthly and annual changes in headline and core consumer prices as published on Wednesday. The figures and comparisons above are taken directly from that release.