The Day at a Glance | June 9 2021

The Top

*Inflation in Mexico decelerates.

*Consumer prices remain moderate in China (1.3% vs 1.6% e. May); producers absorb costs of raw materials (PPI 9% May).

*EU and the United States will seek to reach an agreement to end trade disputes next week.

Economic environment

Inflation in Mexico decelerated during May. The Consumer Price Index recorded a 0.2% monthly rate of growth during May in Mexico, slightly above the estimated 0.17%. With this, the annual rate of inflation decelerated to 5.89% (vs 5.86% e.). Energy prices and government fees shrunk for a second consecutive month (-2.71%), while agricultural goods slowed down their rate of growth (1.91%) which led the non-underlying component to contribute negatively to the general rise in prices (-0.75%). However, the underlying component once again surprised to the upside during May (0.53% vs 0.47% e.) and set at an annual rate of 4.37%. Goods recorded their highest monthly rise of the year (0.62%), while prices in services accelerated their recovery (0.42%) led by non-education and non-housing services (air transport 20%; diners, small restaurants and taco stands 0.82%). The Central Bank of Mexico expects underlying inflation to resume a downwards trend starting in the 3Q21; only a redirection in the expected trend or important upwards adjustments in medium and long-term inflationary expectations could pressure the central bank to consider raising the target interest rate.