📝Mexico Inflation Continues to Prove Challenging: Banorte

The result was mainly influenced by the 1 st fortnight, noting the 13.0% m/m decline in electricity due to the onset of the summer discounts in said period. Remaining energy items were more mixed, while agricultural goods (2.3%) were pressured on the back of

a 3.9% expansion in fruits and vegetables. At the core, services (0.1%) were limited by a positive seasonality in tourism branches, with goods slightly higher at 0.3% given increases in both components

We believe this report continues to underline challenges in the fight against inflation, which is key for Banxico to hold the reference rate at 11.00%.

As we elaborated in our last View from the Top, we think several factors will drive a pause today, including a challenging inflationary outlook –which we believe was more clearly captured in today’s report– and less room to maneuver in terms of the relative monetary stance with the US. However, reductions will likely continue throughout the year, expecting the rate to close 2024 at 10.00%. - Banorte