Mexico CPI slightly higher than expected but still below target

Mexico CPI increased 0.13% 2w/2w in the first fortnight of June, mainly explained by higher core prices (consensus: 0.10%) due to a strong core food inflation and price increases in perishable goods (tomato). In annual terms, inflation increased to 2.87% y/y from 2.82% previously.

"This print puts some minor upward pressures on our 2.6% y/y year-end forecast, but we will wait to observe the report for the second half of the month to make any adjustment, if it is necessary. The services inflation is in line with what has been observed in the past (0.08% 2w/2w), which suggests that demand side pressures are still not present, while most of the pressures observed are probably related to supply shocks and might be reversed." notes Barclays     

Annual inflation should continue below target and is likely to decrease in the coming months. The central bank is still likely to wait for the US Fed to make a move in order to consider a change in its reference rate.

"We expect Banxico to remain on hold next July 23." adds Barclays