🇲🇽❗️Cable FX Macro Weekly Note: Mexico Retail Sales, Bi-Weekly CPI

**As seen in Risk In The Week report 11/17/23, subscribe at cablefxm.co.uk/reports

Mexico October retail sales showed signs of easing as the rate decelerated to 3.2% Y/y in August, the monthly decline of 0.4% was the softest data point since March. The figure could be indicative of a slowdown in consumer strength as the central bank's policy and inflation take a toll. On the price front, consumer prices eased to 4.26% Y/y in October from a prior 4.45%, this was in line with economists' estimates. The core metric decelerated to 5.5% from a prior 5.76%, this left less volatile items prices rising at the slowest pace since late 2021. Having said this, inflation readings show a continuation of the preceding deflationary progress and give the central bank room for policy flexibility.

A couple of weeks ago, Banxico left the overnight target rate unchanged at 11.25%, while the statement dropped a reference for an "extended period" of the unchanged policy rate. The adjustments in the communication were interpreted as dovish, the docket this week will help determine how soon are we from a concrete change in posture from the Mexican central bank. As a reminder, Banxico's own Economic Expectations of Private Sector Analysts saw an uptick in October inflation expectations for the next 12 months, prices are now seen at 4.22% from a prior 4.15%. Given the slowdown in core CPI and expectations that the Fed's tightening cycle is over, the desk at Société Générale expects Banxico to cut rates as soon as February, they have revised their 2024 ON rate forecast lower to 8.75% from a prior 9.0%. On the other hand, BBVA's Big Data Consumption Indicator is showing a rise of 0.5% M/m in October, they cite the month being supported by goods spending. Ahead, BBVA expects private consumption to remain resilient as domestic demand is showing a better standing this year.