The transfer of prices will fuel a slow downward trajectory of inflation towards the punctual objective and will motivate a turn in the monetary policy of Banco de México to become more hawk, which in monetary language indicates “more restrictive and less tolerant to inflation”, anticipated the Economist for Mexico of BNP Paribás, Pamela Díaz Loubet
Inflation expectations for this year are unanchored and the return to the Bank of Mexico’s specific objective of 3% will be very slow, warned the economist for Mexico at BNP Paribas, Pamela Díaz Loubet.
This means that inflation will remain above target and on a slow downward path for most of the year, he stressed. In fact, for this year, it expects inflation to complete an annual variation of 4.6% and that the average annual inflation for each month is 5.7 percent.
Interviewed by El Economista, she anticipates that this transfer of prices and a slow downward trajectory towards the specific objective will motivate Banco de México to change its monetary policy to become more hawkish, which in monetary language indicates “more restrictive and less tolerant to inflation”. ”.
The most probable scenario for the monetary policy that they have in the firm is eight increases in the rate of 225 basis points, which would leave the yield at 7.75 percent.
The rate is currently at 5.50% after a 50 basis point hike in December. If BNP Paribas’ projection is correct, Banxico would raise the rate by 225 basis points throughout 2022, distributed in the eight scheduled monetary meetings, starting in February, with an increase of 50 basis points.
slow downward trajectory
At BNP Paribas they project that inflation will return to the upper limit of the target, which is 4%, until the second quarter of next year and that Mexico will not register inflation close to the specific target of 3% until 2024.
The strategist details that the producers who set the prices have ended up transferring the pressures of the rise in gas, gasoline and fertilizers to the final products, a situation that confirms that there is already damage to price formation.
So tomorrow, when the external shocks or the upward pressure on energy prices are eased, inflation in Mexico will remain persistently high, which opens the risk that convergence to the target will be slow.
Díaz Loubet takes the variation of prices in restaurants, inns and taquerias, to test the transfer of prices. Inegi information shows that prices in this segment of prepared food services increased 8.35% at the end of December, above the 7.36% of general inflation.
They see three or four more weeks of increases in the price of lemon and avocado
Behind the escalation that both fruits have had, there are climatic factors such as frosts and hailstorms, scarcity of irrigation water and distribution problems that have increased as a result of the pandemic, producers agreed in an interview.
Producers of lemon and avocado who distribute their products in the Central de Abasto of CDMX estimated that the price of both fruits will continue to increase for three or four more weeks before beginning to moderate. But it won’t go down.
Data from the National Institute of Statistics and Geography show that after 12 months, the price of lemons completes a variation of 90.12%, while that of avocados shows an annual fluctuation of 43.96 percent.
Behind the escalation that both fruits have had are climatic factors such as frosts and hailstorms, scarcity of irrigation water and distribution problems, which have increased as a result of the pandemic, producers agreed in an interview.
Manuel Romero Bello, an avocado producer, stated that the export of the fruit to the United States, given the proximity of the Superbowl, has become a seasonal pressure factor for the price.
Currently the Hass avocado is at 60 pesos, in the Central de Abasto. This price is lower than that reported by Profeco, of 71.37 pesos.