The Day at a Glance | October 24 2022

*Inflation in Mexico slowed down more than expected during the first half of October (8.53% annual); underlying inflation is still high.

*China`s economy grew more than expected in the 3Q22 (3.9% annual).

*Europe`s economy receded for a fourth consecutive month; services and manufacturing activities slowed down more noticeably.

*Xi will continue leading China for a third term; he took more control of the country by designating allies in key government positions. 

*Rishi Sunak leads in British polls to become new Prime Minister.

*¾ of Europe`s population decreased spending in light of higher prices.

Economic environment

Inflation slowing down. Consumer prices in Mexico started showing more moderate inflation during the first half of October; although underlying inflation is still concerning for the country`s central bank. On a biweekly period, general prices increased 0.44% and the general index set at 8.53% annual, both figures below estimates (0.53%e. and 8.62%e., respectively). A high comparable base effect along with a contraction in agricultural prices (-0.46% q/q) contributed to the positive news. However, underlying inflation continued exceeding estimates by increasing 0.42% biweekly (vs 0.36%e.) and continued rising at an 8.39% annual rate (vs 8.32%e.). Commodities kept increasing at a steady pace (0.53% q/q), while services logged a 0.3% biweekly increase. Energy prices, for their part, logged their largest biweekly rise since March (1.3%) as electricity price programs carried out during the warm season in 18 of the country`s cities came to an end (electricity 17.46% q/q). Data maintains expectations of additional interest rate increases on behalf of the Central Bank of Mexico for what`s left of 2022. Persistent underlying inflation – which could possibly not reach its peak until the end of 2022 – and expectations of greater interest rates in the United States both prevent the Central Bank of Mexico to point towards the end of the increasing rates cycle.

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