The Day at a Glance | February 9 2022

The Top

*Inflation in Mexico slowed down slightly less than expected before Banxico`s decision (7.07% y/y Jan. vs 7.02%e.).

*U.S. household debt increased in 1 trillion dollars during 2021, the largest increase since 2007: NY FED.

*ECB warns the banking sector about possible cyberattacks after increasing tensions with Russia.

Economic environment

Inflation in Mexico slows down. The INEGI`s latest figures on the Consumer Price Index confirmed a slowdown in general inflation – it set at 7.07% during January. The decrease in the general index was slightly less than estimated (7.02%e.) after 0.59% monthly increase (vs 0.55%e.) was logged. Nevertheless, the positive surprise came from the underlying component, which logged a slower than expected monthly rise (0.62% vs 0.76%e.). At an annual rate, underlying inflation accelerate to 6.21%. Non-underlying inflation seems to be behind the surprising increase in the general index, with acceleration seen in energy prices (0.75% monthly) and government fees (1.02% monthly). Agricultural goods logged a 0.14% increase. As for commodities, they recorded their largest monthly increase in the last 12 months (0.99%) and showed no signs of becoming more moderate and were boosted by food prices (1.29%). Services prices logged a 0.19% rise during January, with the largest rise seen in education (0.52%); this is the lowest rate of inflation in services since August of 2021. The persistent increase in commodities suggests that imported inflation and production chain issues remain as the main forces that are driving the increase in prices in Mexico at the beginning of 2022. Mexico`s Central Bank will have a meeting on Thursday to make a monetary policy decision in which at least a 25bp interest increase is expected to occur; although some consider that the increase may even be 50bp.