The Day at a Glance | April 7 2022

The Top

*Inflation in Mexico surprised to the upside and reached a new record high since January of 2001.

*China indefinitely extends quarantine measures in Shanghai in light of the virus`s fast spread – despite discontent.

*The Russian ruble recovered and set at levels prior to the invasion of Ukraine, despite sanctions.

*The FED`s meeting minutes point to a fast reduction in its balance (95 billion monthly dollars) and a 50bp interest rate increase in May.

*Several of the ECB`s members showed concern over inflation and called for a faster withdrawal of stimulus, according to the central bank`s meeting minutes.

*Christine Lagarde tested positive for COVID-19 a week before the ECB`s monetary policy meeting.

*Canada won`t allow foreigners to buy property for two years in an attempt to stop the rise in real-estate prices.

Economic environment

Inflation increases in Mexico. Inflation in Mexico reached a new high in the last 20 years by recording a 7.45% annual hike in March (0.99% monthly). The figures exceeded estimates, which forecasted a 0.9% monthly (7.38% annual) rise. Energy related goods contributed the most to a rise in the non-underlying component after recording a 3.01% monthly increase due to the impact on prices because of the conflict in Ukraine. However, the rise in inflation wasn’t only logged in this component, which could keep the Central Bank of Mexico worried. Underlying inflation increased more than estimated and logged a 0.72% monthly rise (vs 0.66%e.) and set at a 6.78% annual rate; its highest level since March of 2021. Commodities continued leading the rise in underlying inflation and were the largest contributing component to general inflation after recording a 0.93% monthly increase; this is the fourth consecutive month in which commodity prices log a rise higher than 0.9%, and the component has accumulated an 8.69% rate of inflation in the last 12 months. Foods logged the largest monthly increase (1.2%). Services, for their part, recorded a 0.47% rise in prices (4.62% annual) and showed upwards pressures, especially in air travel (41.69% monthly) and tourism related services (12.38% monthly). Along with this data, inflation for producers was also made known; it logged a 10.36% annual rise during the month (1.96% monthly) and passed the previously recorded high logged last December. The data backs a restrictive monetary stance on behalf of the Central Bank of Mexico in the following months.