The Day at a Glance | June 24 2021

The Top

*Inflation in Mexico accelerated more than expected during the first half of June.

*Kaplan and Bostic expect a rise in FED rates at the end of 2022.

*OPEC+ considers greater increases in crude oil production in next week`s meeting.

*The Central Bank of England maintains stimuli in the economy and assured that it will not act hastily because of inflation.

*The White House and legislators are close to reaching an agreement on infrastructure spending before Congress goes on recess.

*Economic indicators: Unemployment in Mexico drops to 4.1% in May; the services sector in the US decelerates (PMI 64.8 vs 70 e.).

Economic environment

New inflationary surprise in Mexico. The Consumer Price Index once again recorded a higher than expected rise during the first half of June in Mexico. Prices increased 0.34% (vs 0.2% e.) and general inflation set at 6.02% annual. The largest rise was seen in the underlying component (0.35% vs 0.21% e.), particularly in merchandise as prices increased 0.42% during the biweekly period (boosted by non-food merchandise, 0.46%). Services once again logged their largest increases in food services (small restaurants, torta stands, taco stands 0.61%) and air transport services (7.67%). The rise in services responds to the normalization seen in economic activities after the pandemic and seasonal effects due to the vacation period (restaurants 0.46%; tourist services 3.33%). This has contributed underlying inflation to increase to 4.58% annual. Energy prices and government fees (0.45%) also logged their largest increase since March, while agricultural goods recorded their smallest rise (0.13% biweekly). The data confirms persistent inflationary pressures in merchandise and a normalization in prices in the services sector. The Central Bank of Mexico expects to see a moderation in inflationary pressures starting in the 3Q21 (Jul-Sep); otherwise, markets could start to anticipate a rise in interest rates at the end of 2021.