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Macroeconomic Forecast Mexico

August 2012 | Macroeconomic Forecasts

Inflation is nearing its ceiling in Mexico, coming in at 4.45% in the first half of August – just slightly up from July’s 4.42% reading. While the high inflation is primarily due to supply side pressures, we note that core prices have recently begun to creep up as well. Indeed, in H1 August, they hit 3.70% on the back of mild pass-through effects from prolonged peso weakness. At this point, we believe the central bank will be unlikely to take action given external headwinds. We note though, that with Mexico’s output gap largely closed, this could present some risk to our call for easing in 2013 if current trends continue.

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