Headline CPI increased 0.44% mom in September, slightly below our forecast of 0.49% and market consensus of 0.47% (as per Bloomberg). Core monthly inflation which stood at 0.36% mom was in line with market expectations (our forecast was at 0.38%), pressured mainly by an above normal adjustment in education prices (3.15% versus 10-year median of 2.10%). Non-core index was pressured by volatile agricultural prices (0.84%) and gas lp prices (2.81%). Annual headline and core inflation fell further to 4.45% in September (from 4.64% in August) and 5.76% (from 6.08%), respectively. We note services annual inflation rebounded to 5.23% in September (from 5.15% in August) driven by education prices. At the margin, the seasonally adjusted three-month annualized headline inflation stood at 5.72% in September (from 4.17% in August), while core inflation increased to 4.16% (from 3.70%) driven by core services index (5.60%, from 4.74%).
Our take: While headline and core annual inflation figures are broadly in line with Banxico’s 3Q23 latest inflation forecast, within the core index, services inflation remained persistent likely associated to tight cyclical activity conditions. In this context and considering also an expansionary fiscal stance next year, Banxico seems unlikely to start its easing cycle this year.
See detailed data below