The Day at a Glance | Jul 7 2022

The Top

*Inflation in Mexico increased 7.99% during June, slightly above estimates.

*Boris Johnson resigns as Prime Minister of the United Kingdom. He will continue as interim PM.

*France acquires the remaining 16% of EDF, the country´s largest electrical company. It will likely steer towards nuclear energy. 

*Industrial production in Germany disappoints (0.2% vs 0.4%e.).

*Jobless claims in the United States set in line with estimates.

*The FED´s meeting minutes showed its commitment to reduce inflation. It is prioritizing inflation over growth.

*The United States discusses capping Russian oil at $40-$60 per barrel.

*China assesses a $220 billion stimulus package through the sale of bonds.

Economic environment

Inflation in Mexico does not yield. According to the INEGI, consumer inflation increased 0.84% in June of 2022, slightly above the 0.81% expected by analysts. With this, prices increased an annual 7.99%. Underlying inflation, for its part, set slightly below estimates and logged a 0.77% monthly rise (vs 0.80%e.) and increased an annual 7.49%. All components increased during this period. Energy sources logged a rise due to a decrease in subsidies (0.49% monthly). Agricultural goods increased considerably (1.76%); and commodities logged a 1.0% hike and continued to record high increases among foods, beverages, and tobacco. Services also recorded a rise in prices during June (0.50%). With this, underlying inflation continued its increasing trend, which started in November of 2020. For producers, inflation increased 0.86% during the month and set at an annual 10.52%, which confirms greater production costs. The data points towards a more aggressive monetary policy on behalf of the Central Bank of Mexico, whose goal is to have inflation converge to its target level.