The Day at a Glance | October 22 2020

The Top

· Inflation in Mexico accelerated slightly above estimates in the first half of October.

· The third and final US presidential debate will take place today.

· Economic indicators: Initial jobless claims fall more than expected in the US (787k vs 860k e.).

Economic environment

The Consumer Price Index increased 0.54% during the first half of October in Mexico, according to the INEGI. The figure slightly exceeded estimates (0.48% e.) and maintained the annual rate of inflation just above Banxico`s target range (4.09%). The underlying index, on the other hand, increased less than estimated during the first half of October (0.14% vs. 0.16% e.) and maintained stability at an annual 4%. The largest increases were seen among the most volatile components, with the price of fruits and vegetables showing a 2.77% biweekly expansion; while energy prices grew 3.72%. Electricity prices were the ones that contributed most to the inflation recorded during the period after the end of subsidy programs that had lowered electricity rates in 18 cities. Regarding the underlying component, prices of goods recorded their weakest biweekly increase since May (0.12%) and services maintained moderate growth (0.17%). The slight acceleration in prices in the first half of October is attributable to seasonal phenomenon and is not expected to be sustained as time moves forward, which is why an additional – and possible – cut in interest rates in November cannot be discarded if the risks regarding US elections, the virus and the possible volatility concerning the exchange rate don`t materialize. Nevertheless, the Governing Board remains divided and the consensus doesn’t expect to see any further movements at the moment.