The Day at a Glance | August 24 2023

*Consumer inflation in Mexico fell to 4.67% y/y during the first half of August. 

*In the US, the sale of new single-family homes rebounded in July, reaching 714,000 (4.4% annualized), the highest level since February 2022, surpassing the 705,000 forecasted by analysts. 

*Initial jobless claims in the US dropped to 230,000 in the week ending August 19th, down from the 240,000 recorded the previous week. However, the four-week average reached a five-week high at 236,750. 

*Durable goods orders in the US declined by -5.2% in July, marking their worst reading since April 2020, primarily due to weak demand in the transportation equipment sector. 

*The Chicago FED´s National Activity Index reached its highest point so far this year, at 0.12 compared to -0.33 in June, driven by positive contributions from production-related indicators. 

*Consumer confidence in the Eurozone declined more than expected (-14.3) during August as it logged a -16.0 point figure. 

Economic environment

Inflation in Mexico continued to decline and set at 4.67% y/y during the first half of August, practically in line with the 4.66% expected by analysts. On a monthly basis, a 0.32% increase was logged, still higher than the historical average for the first half of August (0.21%). Core inflation, which is already starting to show more moderate changes, recorded a 0.19% q/q figure compared to the historical average of 0.18% q/q for the 2000 – 2022 period. This is due to a 0.16% q/q increase among goods, which offset the still relatively high reading (0.23% q/q) in services. However, the non-underlying component continued to accelerate for the third consecutive half-month as it logged a 0.72% q/q figure, more than double its historical average of 0.31% q/q for the same period. This performance is explained by increasingly significant changes in energy prices and government tariffs (0.8% q/q), as well as relatively high readings in agricultural and livestock products (0.62% q/q). In fact, the three categories with the largest figures during the month were tomatoes, household LP gas, and onions. With this, the non-underlying category´s annual figure returned to positive territory (0.13%), while the underlying category stood at 6.21% y/y, surprising to the downside (6.24% y/y e.). Overall, although general inflation and underlying inflation continue to move in the right direction, the positive impact of the non-underlying category appears to have finally come to a halt.

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