The Day at a Glance | May 9 2023

*Inflation in Mexico fell to its lowest level in 18 months in April, supported by a moderation in the underlying component and a contraction in non-underlying prices. 

*INEGI reported that 253,335 light vehicles were exported in April (4.99% y/y), bringing the total to 994,641 units in the January-April period (7.85% y/y). In addition, total vehicle production was 294,550 in the month (17.1% y/y), for a total of 1,216,727 units in the first four months of the year (10.55% y/y). 

*US President Joe Biden will meet with House of Representatives Speaker Kevin McCarthy to discuss the debt ceiling. 

*In the US, wholesale inventories showed no monthly change in March, compared to a 0.1% figure in February. Wholesale sales also fell by -2.1% m/m. 

Economic environment

During April, consumer inflation logged an annual 6.25%, its lowest level since October 2021. This moderation was derived from a monthly -0.02%, the first negative monthly reading in three years. Although both figures set slightly above estimates (6.22% y/y and -0.05% m/m), the magnitude and directionality of the readings show that inflation continues to moderate significantly. Furthermore, the underlying component showed moderation in its monthly reading by setting at 0.39%, from the previous reading of 0.52% m/m, aided by a slowdown in services (0.25% after the rebound in February and March) and an increase (0.5% m/m) in the prices of goods. This was reflected in widespread declines among annual readings, at 7.67% for the underlying sub-index, 9.54% for goods and 5.46% for services. On the other hand, the non-underlying component recorded its largest monthly contraction in three years (-1.25%), which was driven by a -2.3% m/m drop in energy and government-authorized fees, while agricultural products logged no variation due to an increase in fruits and vegetables (-1.61% m/m) being offset by livestock (1.25%). With this, non-underlying inflation slowed down to an annual 2.12%; agricultural prices logged a 6.13% annual figure and energy recorded a -1.08% decrease. Overall, April´s figures show evidence of progress in the fight against inflation, and although they mainly derive from a comparison base, with a greater emphasis on the non-underlying side, they are positive enough to “open the door” for Banxico to keep the reference rate unchanged in its next monetary policy meeting on May 18^th. This idea is also supported by Governor Rodriguez´s statements in her appearance before the Senate last month, where she indicated that the Board of Governors would be evaluating the possibility of putting a stop to the tightening cycle in its next decision (May).