🇲🇽❗️Cable FX Macro Weekly Note: Mexico November Consumer Prices

**As seen in Risk In The Week report 12/01/23, subscribe at cablefxm.co.uk/reports

Mexico consumer prices extended the deceleration trend, the headline rose by 4.26% and the core figure printed at 5.5%, the latter was slightly above the consensus median. Goods prices fell to 5.64% Y/y, this is the lowest level since mid-2021. We saw fewer signs of progress from services as inflation accelerated to 5.34% vs the prior 5.23%. Also, energy prices saw the largest contribution in October as they added 0.3 percentage points to the headline. We will be looking at developments in core prices as investors predict Banxico’s easing cycle starting as soon as early next year. Some analysts have noted a rise in electricity charges and energy components extending into November, this is paired with base effects and is likely to give a push-up to the CPI print. The most recent Banxico inflation report saw the central bank leaving its forecasts unchanged, they expect prices to rise 4.3% in 2024 and 3.63% in 2025. Recent commentary from Banxico’s chief Rodriguez hinted at discussions of a rate cut in the meetings scheduled for early 2024, she added that the tightening cycle has come a long way and that this gives the central bank the flexibility needed to change its forward guidance. Inflation forecasts from the desk at Goldman Sachs stand in line with Mexico’s central bank, if the projections materialize, this would translate into a decline of almost 100bps for 2024 headline CPI. Goldman expects 175bps of Banxico rate cuts for next year, this would leave the central bank rate at 9.50%