Mexico’s inflation slowdown was broadly based

Genevieve Signoret

Prices

Mexico’s annual inflation slowed down sharply in the first half of January. Headline annual inflation came at 3.08%, down from 4.08% in December, while the core fell to 2.43% from 3.24%. A slowdown was expected, but not one this sharp. The drop was driven by four main factors: the elimination of domestic long-distance charges (in the core index), a smaller gasoline price increase than last year’s (in the non-core and energy indices), a drop in the fruit and vegetables sub-index (ditto), and a high year-ago comparison base (this was crucial). We forecast 3.2% inflation for Mexico in 2015.

Mexico’s inflation sharp slowdown was broadly based