The Day at a Glance | December 7 2023

*Inflation in Mexico stands at 4.32%, lower than estimates, with core inflation continuing to decelerate.

*In China, trade balance data for November show improved export performance while imports decreased, highlighting issues in the domestic market.

*U.S. Treasury Secretary Janet Yellen visits Mexico to discuss measures regarding fentanyl trafficking. She will meet with López Obrador today.

Economic environment

INEGI released the inflation data for November at 4.32%, lower than the estimates (4.39%) but slightly accelerating compared to the previous month. Month-to-month, inflation was 0.64%, while core inflation was 0.26%, resulting in an annual rate of 5.30%. Within the core category, merchandise prices increased by 0.14% and service prices by 0.42%. Annually, these two components increased by 5.30% and 5.28% respectively, still remaining at elevated levels. The non-core component increased by 1.81% every month, and 1.43% year-on-year. Within the non-core component, prices of agricultural products advanced by 0.79% and prices for energy and government tariffs by 2.70% due to the conclusion of the subsidy to the electric tariff program. This data contributes to the narrative that the first rate cut by the Bank of Mexico could occur in the first quarter of the year, however, it is important to keep in mind that risks in the outlook remain, with increased public spending and the minimum wage hike being the most significant.