The Day at a Glance | October 7 2021

The Top

*Inflation in Mexico accelerated during September (6% annual).

*Republican Senators will propose increasing the debt ceiling until December; Democrats signal they would accept the deal.

*The ECB´s meeting minutes show there is consensus regarding the emergency purchasing program not extending beyond March 2022.

*Putin offers record natural gas exports from Russia to Europe to minimize scarcity in the continent.

*Joe Biden and Xi Jinping agree to meet and restart bilateral conversations between both powers this year.

*IMF warns about capital outflow risks among emerging economies due to monetary normalization in the FED and the ECB.

Economic environment

Inflation accelerates in Mexico. The Consumer Price Index recorded a 0.62% increase during September and set at a 6% annual rate. The figure set slightly above estimates (0.6%e. monthly) and the annual rate set at its fastest rate since April. Commodities (0.68%) explain most of the rise in prices and recorded their second fastest rate of monthly acceleration this year. Agricultural goods (1.38% monthly) and energy prices (1.13%) were also important contributors to the rise, especially because of the hike in fruits and vegetables (3.24% monthly) and domestic LP gas (4.73% m/m). Services continued to increase at a moderate pace (0.21% monthly), the third slowest so far this year. Underlying inflation maintained its upwards trend by increasing 0.46% during the month, set at a 4.92% annual rate and showed no signs of moderating said trend. Available data for the first half of September has put pressure on the money market, which now estimates a more aggressive cycle of increasing interest rates on behalf of the Central Bank of Mexico, with the target rate close to 5.25-5.50% by the end of 2021, and 5.75% by the end of 2022.