Mexico: CPI to show a decline in annual inflation in August – BBVA


On Thursday, mid-month inflation data is due in Mexico. According to Javier Amador, economist at BBVA Research, the core inflation is still set to remain sticky to the downside during the third quarter, while the annual rate is set to decline. 

Key Quotes: 

“We expect annual headline to ease 0.25pp in the first half of August with core likely inching down only 0.02 pp in annual terms. We expect increases of 0.10% and 0.15% HoH for headline and core inflation, translating into 3.47% and 3.81% YoY, respectively, down from 3.72% and 3.83%, respectively in the second half of July.”

“If our forecasts prove accurate, core inflation would have remained sticky to the downside for the fourth consecutive fortnight (ranging between 3.81 and 3.83%) while headline inflation would have declined for the seventh fortnight in a row after reaching a year-high 4.44% in the second half of April.”

“We now have a downward bias to our below-consensus 3.4% year-end forecast. The expected stickiness for core prices rests on the core services subindex which is likely to remain stable as core food annual inflation starts to ease somewhat and non-food core goods inflation remains low. We continue to expect core inflation to ease more significantly in 4Q19. We continue to expect 3.3% by year-end.”

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