America’s contribution to improving inflation: Benxico


Mexico City- High inflation in the United States has contributed to pressure on prices in Mexico and the effect is expected to continue through 2022, members of the Governing Board of Banco de México (Banco) highlighted.

In addition, global and domestic inflationary pressures influence annual headline and core inflation, which is why inflation forecasts for this year have been revised upwards.


He also indicated that the economic recovery remains fragile, incomplete and skewed across sectors, despite the fact that the country’s economy shows reactivation after a contraction in the third quarter of 2021, with data from October last year showing.

“Due to deep economic integration with the United States, high inflation in this country has contributed to the rebound in inflation in Mexico,” indicate the minutes of the December 16, 2021 meeting of the central bank.


A board member stressed that given the high inflation that will persist in the United States through 2022, there could be more imported inflation.

“General and underlying inflation expectations rose again for 2021, 2022 and the next 12 months, as well as for the medium term, while remaining stable at levels above the longer-term target (3 percent)” , indicated in the document.

Most highlighted that the expectations for the end of 2022 are already above the upper limit of the target range (4 percent).


All told, general and underlying inflation forecasts were again revised upwards, particularly the 2022 forecast.

The average general inflation rate for the first quarter of the year increased from 6.3 to 6.7 percent; from 4.8 to 5.1 percent in the second quarter; up 3.9 to 4.3 percent for the third quarter; And up 3.3 to 3.5 percent in the last quarter.

Most indicated that their annual measurement is expected to decline further after one year and converge to a target of 3 percent at the end of the forecast horizon (4th quarter 2023).


Most noted that annual headline inflation in November reached its highest level since January 2001. He highlighted that more than half of the generics that make up the National Consumer Price Index (INPC) are growing at a rate above 5 percent.

All noted that core inflation faced pressure on trading prices and a rebound in services prices.

Amid upward risks to inflation, the majority highlighted external inflationary pressures and the balance of risks with respect to the forecast trajectory for inflation in the forecast horizon has again deteriorated and remains on the rise.

With regard to economic activity, it is noted that supply chain disruptions still persist and automotive manufacturing exports registered a decline once again in October.

Most members noted that the labor market continues to improve, although it still has an impact compared to pre-pandemic levels. In addition, he indicated that the recent increase in the minimum wage could put pressure on labor costs.

In the monetary policy vote, Alejandro Diaz de Leon, Gallia Borja, Irene Espinosa and Jonathan Heath voted in favor of raising the interest rate by 50 basis points to 5.5 percent.

Gerardo Esquivel voted for an increase of 25 basis points, arguing that the continued rise in rates did not prevent inflation from rising to levels not seen in two decades, as the reason why the episode originated primarily from outside.

It should be noted that this was Diaz de León’s last participation in the central bank’s monetary policy vote, as he was replaced by Veronica Ceja Rodriguez in early 2022.