The Day at a Glance | March 23 2023

*In Mexico, inflation for the first half of March slowed down more than expected. 

*Mexico´s retail sales surprised to the upside in January. 

*In the US, initial jobless claims marginally decreased to 191,000 for the week ending March 18th from the previous week. 

*The US current account balance for the 4Q22 was -$206.8 billion, the smallest deficit since the 2Q21.

Economic environment

The Consumer Price Index (CPI) recorded a 0.15% increase during the first half of March. This reading was lower than the consensus estimate of 0.26%, and as a result, general inflation set at 7.12% annual, also lower than the 7.24% forecasted by analysts, and marked four consecutive biweekly declines. This positive surprise in inflation came from the non-core side, which recorded a biweekly -0.31% decrease due to declines in both agricultural (-0.47%) and government-authorized energy and tariff rates (-0.18%). With this, on an annual basis, the non-core sub-index recorded its lowest reading since the second half of February 2021, at 4.15%, while the government-authorized tariff category recorded a 1.05% annual hike, also the lowest since December 2020. However, the core component continues to resist logging a decline, as it logged a 0.30% biweekly figure and an annual rate of 8.15%, mainly driven by the services category, which recorded a biweekly reading of 0.35% – this resulted in an increase in the annual reading (to 5.68% vs 5.52% prev.), while goods maintained a downwards trend for a fifth consecutive biweekly period. Although, this occurred at still significantly high rates, as evidenced by the 10.26% annual figure logged in the most recent biweekly period. With this, we believe that inflation will continue to report declining figures, mainly supported by the comparison base. 

Retail sales logged a 1.6% monthly increase in January, double what was expected by the consensus. With this, the annual rate set at 5.3%, the largest increase since February of 2022. The sale of textile products and jewelry logged the largest increase (18.2% y/y); followed by motor vehicles (11.8%) and online sales (10.1% y/y). In contrast, health care related products and groceries decreased -8.9% y/y and -1.5% y/y, respectively. Overall, this reading indicates there is still strength in the internal market at the start of 2023.