The Day at a Glance | November 10 2021

The Top

*Inflation in the United States surprised to the upside in October (6.2% annual).

*Natural gas prices decrease in Europe as Russia increases supply in the region.

*Inflation for producers surprises to the upside in China (13.5% annual, Oct.); there are signs that producers have transferred costs to consumers (CPI 1.5% annual).

*Mexico`s House of Representatives will debate cutting the INE`s budget as part of the 2022 Expenditure Budget of the Federation.

*Joe Biden and Xi Jinping will have a virtual meeting next week.

*Brazilian representatives approved a bill to loosen fiscal laws and allow Bolsonaro`s social programs to be financed before the 2022 elections.

Economic environment

Inflation in the United States exceeds 6%. The United States Consumer Price Index logged a 0.9% monthly rise in October, exceeding analysts` estimates (0.6%e.), and led annual inflation to set at 6.2%, its highest level since 1990. The increase in underlying inflation also surprised markets as it recorded a monthly 0.6% increase (vs. 0.4%e.) and accelerated the annual rate to 4.6%. This is the fastest rise in both overall and underlying inflation since June-July and points towards inflationary pressures that are less transitory than initially expected. A large part of the increase in overall inflation is explained by energy prices (4.8% monthly). Regarding underlying inflation, used automobile prices increased after logging two months of contraction (2.5%) and the rise among new vehicles practically remained constant for a sixth consecutive month (1.4%), which contributed to a 1% increase in commodity prices. Services, for their part, logged a 0.4% increase (their largest in the last 4 months), with increases in housing (0.5%), transportation services (0.4%; after three months of contraction) and medical services (0.5%; their highest monthly increase in 2021). Underlying inflation is set at its highest level since 1991. October`s surprising rise in inflation confirms that the increase in prices is extending beyond categories linked to the reopening, with an overall increase in goods and services while demand remains firm and problems can be seen among production chains.