The Day at a Glance | July 9 2020

Inflation rises slightly more than estimated in Mexico

INEGI confirmed a 0.55% monthly increase in prices in the economy, which sets the annual rate at 3.33% (vs 3.2% e.). This is the largest monthly rise since December. Underlying inflation also increased, 0.37% monthly and 3.71% annually. The strong fall in prices regarding agricultural goods (-2.09% monthly) was more than offset by the rise in energy prices (5.98%; with surges above 6% in concerning gasoline and over 3% regarding LP gas). The less volatile components saw their largest monthly increase of the year, mainly boosted by commodity prices (0.6% monthly); even though prices in services continue to show a lack of acceleration (0.11%). Inflation is not expected to continue to grow in the following months – it`s expected to maintain or even moderate. Any important changes in these expectations, considering the data that will be known during summer or fall, could aggressively cut estimates on behalf of the Mexican Central Bank, which makes public its most recent meeting minutes today.

The US labor market stabilizes

Initial jobless claims in the US showed that citizens continue to look for government aid at a slightly slower pace than what was seen at the end of June. The amount of claims made last week totaled 1.31M (vs 1.37M e.), 99 thousand less than two weeks ago. The total amount of American citizens that receive aid from the government decreased to 18.1 million on the week that ended on June 27th (18.7 M prev.). Figures are slightly more positive than expected and still don`t show a relevant impact due to the rise in cases in some states. June`s last weeks` figures have been revised downwards and data suggest that unemployment has been declining week by week. However, demand for government aid is still way above what is usually seen despite the reopening. The deterioration seen in the labor market has stopped, but there have been no substantial improvements.